Download PDF Version - American Eagle Outfitters
Download PDF Version - American Eagle Outfitters
Download PDF Version - American Eagle Outfitters
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
SO, YOU WANT TO<br />
CHANGE THE WORLD?<br />
GOOD. SO DO WE.<br />
CHECK OUT HOW WE’RE MAKING OUR WORLD<br />
A BETTER PLACE. WE HOPE YOU’LL JOIN US.<br />
DISCOVER, LEARN AND SUPPORT NEW WAYS TO<br />
LIVE YOUR LIFE IN A BETTER WORLD.
TABLE OF CONTENTS<br />
AE Better World<br />
About Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2<br />
About This Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3<br />
Our Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4<br />
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6<br />
Guiding Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7<br />
Protect, Respect, Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . .8<br />
Codes & Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9<br />
Our Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11<br />
Public Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12<br />
Supply Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13<br />
Our Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14<br />
Working With Factories . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15<br />
Our Factory Inspection Program . . . . . . . . . . . . . . . . . . . . .16<br />
Factory Training & Capacity Building . . . . . . . . . . . . . . . . . .17<br />
How Our Products Are Made . . . . . . . . . . . . . . . . . . . . . . . . .19<br />
Making Smarter Business Decisions . . . . . . . . . . . . . . . . . . .20<br />
Leveraging Collective Efforts . . . . . . . . . . . . . . . . . . . . . . . . . .21<br />
Our Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24<br />
Supply Chain Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31<br />
Supply Chain Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32<br />
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33<br />
Conserving Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34<br />
Minimizing Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37<br />
Product Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39<br />
Environment Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40<br />
Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41<br />
Our Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42<br />
Compensation & Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .43<br />
Communication & Retention . . . . . . . . . . . . . . . . . . . . . . . . .44<br />
Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45<br />
Diversity Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46<br />
Hiring & Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47<br />
2010 Business Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . .49<br />
Associate Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50<br />
Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51<br />
National Charity Partnerships . . . . . . . . . . . . . . . . . . . . . . . . .52<br />
Customer Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54<br />
Major Community Initiatives . . . . . . . . . . . . . . . . . . . . . . . . .55<br />
International Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56<br />
Associate Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58<br />
Community Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59<br />
FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60<br />
Contact Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64<br />
GRI Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
AE BETTER WORLD ABOUT US<br />
About Us<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is built<br />
on more than 30 years of customer focus,<br />
dedication, and innovation. The company was<br />
founded with one store, in Novi, Michigan,<br />
in 1977. Today, you see many iterations of<br />
the number 77 throughout our clothing,<br />
vernacular and imagery - one of the many<br />
threads of respect to our rich heritage.<br />
The Schottenstein family of Columbus, Ohio took over the company in the early<br />
nineties, which is also when we introduced our first line of private-label merchandise.<br />
The Schottensteins were, and remain today, consummate retailers, with generations of<br />
experience and several successful companies. Under this leadership, we set our sights<br />
on creating a brand that offers high-quality, on-trend clothing at affordable prices,<br />
targeted to the college lifestyle. Decades later, that core mission remains.<br />
In 1994, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. went public on NASDAQ under the “AEOS”<br />
symbol. Over the next decade, the company demonstrated outstanding growth and<br />
profitability, solidifying its position as a leading lifestyle brand. In March of 2007, the<br />
company began trading on the New York Stock Exchange under the symbol “AEO”.<br />
Our shareholders include associates, individuals, large financial institutions, socially<br />
responsible investment funds, and everyone in between.<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is now a portfolio of brands, with<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> for 15 - 25-year-old girls and guys, Aerie<br />
for the college girl, 77kids for grade-schoolers, and little77 for infants.<br />
AE.COM®, the online home of all of our brands, ships to 76 countries<br />
worldwide.<br />
Over the past few years, we have expanded into the international market.<br />
We launched stores in Canada in 2001 and opened 3 franchise stores<br />
in the Middle East in 2010. Our first franchise stores in Hong Kong,<br />
China, and Russia opened in early 2011, and the company has plans for<br />
expansion into Japan and Israel in the near future.<br />
With corporate offices in three very distinct locations - Pittsburgh, New<br />
York City, and Hong Kong - <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. has built a<br />
distinctive company culture based on our core values that continues to<br />
shape our aspirational yet accessible brand identities. Today, we have more<br />
than 1,000 stores and 30,000 associates worldwide.<br />
For more information on the company, please visit our investor<br />
information site 1 .<br />
NEXT About This Report<br />
1 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-homeprofile<br />
2
AE BETTER WORLD ABOUT US ABOUT THIS REPORT<br />
About This Report<br />
This website represents <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc.’s first comprehensive<br />
Corporate Responsibility report, available exclusively online. It focuses on four key<br />
areas of our company: Supply Chain, Environment, Associates, and Communities.<br />
Where possible, the report references relevant indicators from the Global<br />
Reporting Initiative (GRI) G3 Guidelines 2 and GRI Apparel & Footwear Sector<br />
Supplement 3 . Unless otherwise specified, all data reflects our Fiscal Year 2010<br />
reporting period.<br />
This report was several years in the making. First, we had to define what corporate<br />
responsibility means to us. We are striving to build a successful, profitable business<br />
that has an enduring positive impact on our people and the communities in<br />
which we live, work, and play. Long before putting words to paper, we took time<br />
to understand the array of human rights, social, and environmental issues that we<br />
face and took steps to strengthen the foundation of our program. We have had the<br />
privilege of learning from peers in our industry and leading companies in other<br />
industries that blazed early trails on human rights and corporate responsibility<br />
issues. By observing their successes and missteps, we are now working to<br />
implement program elements that are most relevant to our business and most<br />
likely to have a positive impact. We have also discovered the value of opening our<br />
doors and listening to the voices of our diverse stakeholders - all of whom continue<br />
to inspire us, challenge us, and encourage our efforts.<br />
The topics covered in this report reflect the core issues raised through this<br />
learning process and by our stakeholders. We define the “materiality” and<br />
relative importance of these issues through our Commitment to Respect Human<br />
Rights 4 , Code of Ethics 5 , and Vendor Code of Conduct 6 , as well as our systematic<br />
participation in multi-stakeholder initiatives and ongoing engagement with<br />
key stakeholders at global, regional, national, and local levels. In the process of<br />
2 http://www.globalreporting.org/reportingframework/g3guidelines/<br />
3 http://www.globalreporting.org/ReportingFramework/SectorSupplements/ApparelFootwear/<br />
4 Page 7<br />
5 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=<br />
&t=1<br />
6 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
developing this report, we also sought out specific thoughts and suggestions from<br />
key stakeholders, in particular, Dr. Ruth Rosenbaum of the Center for Reflection,<br />
Education, and Action (CREA) 7 .<br />
We still have work to do. As this report demonstrates, our current programs are<br />
neither perfect nor complete - but we are making progress and we are committed<br />
to continuing to improve.<br />
Many advocates of corporate transparency cite U.S. Supreme Court Justice Louis<br />
Brandeis’s famous observation that “sunlight is the best disinfectant.” We agree.<br />
We believe that reporting publicly on corporate responsibility is one of the most<br />
effective ways to help us remain focused, disciplined, and accountable in our<br />
efforts. We plan to issue a comprehensive report every two years, with more<br />
frequent updates on important issues and quantitative performance indicators as<br />
needed.<br />
NEXT Our Stakeholders<br />
7 http://www.crea-inc.org/<br />
3
AE BETTER WORLD ABOUT US OUR STAKEHOLDERS<br />
Our Stakeholders<br />
Customers<br />
The <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> customer is between 15 and 25 years old and part of<br />
the most socially conscious generation in modern history. These women and men<br />
are at the center of everything we do. They are our reason for being.<br />
Our customer-focused point-of-view drives our business decision-making. We<br />
were among the first specialty retailers to enable customer reviews on our product<br />
website, whether positive or negative. We invest in technology such as mobile<br />
applications and social media tools that define our customers’ way of life. We strive<br />
to anticipate our customers’ desires and listen to their needs, which they often<br />
express in reviews and honest feedback on ae.com. Consequently, when customers<br />
told us that they wanted us to help make the world better, we listened. From the<br />
streets of New York City to the streets of Kuwait City; from the classrooms of<br />
Louisville to the classrooms of Hong Kong; from the beaches of L.A. to the beaches<br />
of Dubai - we work hard to be a brand that our customers are proud to wear<br />
because we are fun, laid-back, fashionable, adventurous, and striving to live our<br />
lives in a Better World.<br />
Associates<br />
The vitality of our brand resides in our people. We strive to be an employer of<br />
choice - a place where people are excited to come to work because they believe in<br />
what we do, enjoy working with each other, and have fun doing it.<br />
Our employees, known as associates, reflect our diverse customer base with<br />
differing backgrounds, unique talents and eclectic tastes. More than 30,000 people<br />
worldwide work for <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. In addition to the thousands of<br />
people in our stores, we employ engineers, software developers, attorneys, fork lift<br />
operators, marketers, PhDs, store construction specialists, accountants, merchants,<br />
designers, warehouse supervisors, and many other skilled professionals in our<br />
corporate offices and distribution centers. More than half of our associates are<br />
younger than 25, enabling us to stay more closely connected to the demographic<br />
we serve. Not surprisingly, some of the best ideas about how we can make our<br />
world a better place have come from our associates - from how to reduce our<br />
environmental footprint to ways to improve the health and safety conditions in an<br />
apparel factory to how best to serve the communities where we live work, and play.<br />
For more information on what it’s like to work at <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc.<br />
please see Live Your Life Love Your Job 8 .<br />
Shareholders<br />
As a publicly traded company on the New York Stock Exchange (NYSE: AEO),<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. strives to deliver strong returns over the long-term<br />
to its investors. Our shareholders include associates, individuals, large financial<br />
institutions, socially responsible investment funds, and everyone in between.<br />
Our goal is to provide those who have an ownership stake in our company with<br />
timely, transparent communications about business performance, as well as insight<br />
into how we plan to grow. We maintain a healthy balance sheet and strong cash<br />
position, while returning value to shareholders through a combination of share<br />
buybacks and dividends. In early 2011, we announced that AEO, Inc. would no<br />
longer publicly report monthly sales to facilitate a longer-term perspective on<br />
business growth. Retailers face many challenges, including variable consumer<br />
confidence, rising cotton prices, or adverse weather conditions. That said, our<br />
longstanding approach continues to be rooted in operational efficiency and<br />
financial discipline designed to withstand any external event or economic<br />
environment.<br />
Supply Chain Partners & Stakeholders<br />
We partner with apparel manufacturers in more than 20 countries around the<br />
world, including the United States, to produce our products. Although we do not<br />
own or operate any of these factories, we firmly believe that the people who make<br />
our clothes should be treated with dignity and respect. We strive to build business<br />
relationships with apparel suppliers who share our commitment to worker safety<br />
8 http://www.liveyourlifeloveyourjob.com/<br />
4
AE BETTER WORLD ABOUT US OUR STAKEHOLDERS<br />
Our StakeHolders (continued)<br />
and well-being and will work to meet or exceed national and international labor<br />
law standards.<br />
We also work with a diverse array of transportation providers in our supply chain,<br />
including ocean and air freight carriers and freight forwarders and consolidators,<br />
who are critical to the timely and efficient movement of our merchandise.<br />
Many of the social and environmental issues that we face in our global supply<br />
chain are too complex, too widespread, and too deeply embedded for any one<br />
company to resolve working alone. To that end, we also seek to build partnerships<br />
with other stakeholders who share our desire to build a Better World. Some of<br />
our key partners include the International Labor Organization (ILO)’s Better<br />
Work Program 9 , the Fair Labor Association (FLA) 10 , local and global civil society<br />
organizations, non-governmental organizations (NGOs), trade unions, other<br />
brands and retailers, and government officials. Through their own vast networks<br />
of people and expertise, these partners help to keep us informed about issues and<br />
concerns in countries where our clothes are being made. Their diverse perspectives<br />
enrich our thinking, challenge us to examine social and environmental issues in<br />
a new light, and provide opportunities to pool our resources to tackle complex<br />
problems in a more sustainable way.<br />
“We find social inspections beneficial because they help us build our<br />
reputation as a socially responsible business. Our customers tend to<br />
favor suppliers who demonstrate socially responsible policies. We’ve<br />
also discovered that good social and environmental practices help us<br />
reduce unnecessary resource consumption, waste and emissions -<br />
and save money. Reducing our utility bills and waste disposal costs<br />
brings us immediate cash benefits. There are other benefits, too.<br />
A good reputation makes it easier to recruit and keep employees.<br />
Employees are also better motivated and more productive. Investors<br />
recognize this and are more willing to finance our factory.”<br />
- A CHINESE SUPPLIER<br />
9 http://www.betterwork.org/EN/Pages/newhome.aspx<br />
10 http://www.fairlabor.org/fla/<br />
Whether you are a customer, an associate, a shareholder, a supply chain partner, or<br />
another concerned stakeholder, we welcome your constructive ideas, thoughts, and<br />
opinions on how we’re doing. Send us an email at: AEBetterWorld@ae.com.<br />
NEXT Corporate Governance<br />
5
AE BETTER WORLD ABOUT US CORPORATE GOVERNANCE<br />
Corporate Governance<br />
19 <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is built on integrity, honesty, and trust. These More information on our Corporate Governance practices is available here . We<br />
virtues are our most important assets. Living them is the responsibility of everyone invite anyone who may have governance questions or comments to email the Board<br />
at our company.<br />
at: boardofdirectors@ae.com.<br />
Our Commitment to Respect Human Rights 11 , Code of Ethics 12 , and Vendor Code<br />
of Conduct 13 establish our guiding principles, which apply to every associate,<br />
officer, director and supplier of the company.<br />
Good governance begins with our Board of Directors, which provides the<br />
independence and diversity of perspective necessary to ensure strong leadership<br />
and effective oversight of the company. Effective June 2011, the Board of Directors<br />
of <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. had nine members, seven of whom were<br />
independent, including one lead independent director. The Board’s general policy<br />
is that the positions of Chairperson of the Board and Chief Executive Officer<br />
should be held by separate persons. Our Corporate Governance Guidelines 14<br />
provide a framework for our governing principles.<br />
The Board maintains three operating committees: the Audit Committee 15 ,<br />
Compensation Committee 16 and Nominating and Corporate Governance<br />
Committee 17 . Each Committee is composed entirely of independent directors.<br />
The Nominating and Corporate Governance Committee 18 is responsible for the<br />
oversight of policies and practices related to Corporate Responsibility.<br />
Maintaining high ethical standards and sound corporate governance is a primary<br />
focus of everyone at <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. It’s good for our business, the<br />
marketplace in which we compete, and for those who place their trust in us.<br />
11 Page 7<br />
12 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=<br />
&t=1<br />
13 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
14 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govguidelines<br />
15 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#audit<br />
16 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#compensation<br />
17 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#nominating<br />
18 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govcommcomp#nominating<br />
NEXT Guiding Principles<br />
19 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-govoverview<br />
6
AE BETTER WORLD ABOUT US CORPORATE GOVERNANCE GUIDING PRINCIPLES<br />
Corporate Governance (continued)<br />
Guiding Principles<br />
Our Code of Ethics 20 , and Vendor Code of Conduct 21 establish our guiding<br />
principles, which apply to every associate, officer, director, and supplier of<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc.<br />
Our Commitment to Respect Human Rights<br />
We believe that the idea of human rights is as simple as it is powerful - treating<br />
people with dignity. We acknowledge and embrace our role to respect human<br />
rights.<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. supports the universal human rights principles as<br />
outlined in the Universal Declaration of Human Rights (UDHR) 22 and the eight<br />
core conventions of the International Labor Organization (ILO)’s Declaration on<br />
the Fundamental Principles and Rights at Work 23 .<br />
We work to promote respect for human rights throughout our operations. We<br />
seek to avoid practices that infringe upon human rights and will work to address<br />
violations we find, including within our supply chain. We recognize that, in<br />
practice, this may involve complex and difficult decisions in order to balance<br />
competing rights, as well as practical constraints within the business and legal<br />
environments in which we operate.<br />
Our human rights commitment is inspired and informed by the United Nations<br />
‘Protect, Respect & Remedy’ Framework 24 as outlined by the Special Representative<br />
of the UN Secretary-General on human rights and transnational corporations.<br />
This Framework rests on three pillars: the State Duty to Protect human rights<br />
through laws, regulation, and adjudication; the Corporate Responsibility to<br />
Respect human rights, which means to act with due diligence to avoid infringing<br />
20 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=<br />
&t=1<br />
21 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
22 http://www.un.org/rights/HRToday/declar.htm<br />
23 http://www.ilo.org/public/english/standards/<br />
24 http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf<br />
on the rights of others and to address adverse impacts that occur; and greater<br />
Access to Effective Remedies for victims of human rights abuses.<br />
Our commitment is implemented through our Code of Ethics 25 , and Vendor Code<br />
of Conduct 26 and applies to all associates, officers, directors, and suppliers of the<br />
company.<br />
25 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=<br />
&t=1<br />
26 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
7
AE BETTER WORLD ABOUT US CORPORATE GOVERNANCE PROTECT, RESPECT, & REMEDY<br />
Corporate Governance (continued)<br />
Protect, Respect, Remedy<br />
United Nations (UN) ‘Protect, Respect, Remedy’ Framework<br />
At <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc.<br />
HUMAN RIGHTS PRINCIPLES<br />
AND POLICY COMMITMENT<br />
SCOPE<br />
ASSESSMENT OF BUSINESS<br />
IMPACT AND ONGOING DUE<br />
DILIGENCE<br />
• Commitment to Respect HUman Rights<br />
• Code of Ethics<br />
• Vendor Code of Conduct<br />
• Applies to all Associates, Officers, Directors, and Suppliers<br />
of the company<br />
• Board of Directors oversight of corporate responsibility and<br />
human resources issues<br />
• Dedicated Human Resources team (Associates, Officers)<br />
• Dedicated Corporate Responsibility team (Suppliers)<br />
• Separate AEO Foundation Board of Directors oversight of<br />
community investment policies and Foundation funds<br />
• Open Door Policy<br />
• Dedicated confidential AEO Hotline and grievance reporting<br />
website<br />
• Supplier inspection and training programs<br />
• Systematic and ongoing engagement with external<br />
stakeholders<br />
INTEGRATION AND TRACKING<br />
PERFORMANCE<br />
COMMUNICATION AND<br />
REPORTING<br />
ACCESS TO REMEDIES/<br />
GRIEVANCE MECHANISMS<br />
• Factory pre-approval process based on Vendor Code of<br />
Conduct compliance<br />
• Factory termination process based on severe or repeated<br />
Vendor Code of Conduct non-compliance<br />
• Supplier & inspection data maintained in Enterprise<br />
database and Corporate Responsibility database<br />
• Defined performance metrics for suppliers<br />
• Formal and informal reporting on performance between and<br />
across functions<br />
• Corporate Responsibility Report / AE Better World public<br />
website<br />
• AEO, Inc. investment and corporate governance public<br />
websites<br />
• CEO-led company-wide meetings<br />
• FLA publication of supplier IEM results<br />
• FLA Annual Report<br />
• SEC and other legal filings<br />
• Company intranet and quarterly newsletter for associates<br />
• Regular engagement through social media (Facebook,<br />
Twitter)<br />
• Participation in national and international conferences and<br />
public presentations<br />
• Formal and informal engagement with external stakeholders<br />
• Dedicated confidential AEO Hotline and grievance reporting<br />
website<br />
• FLA complaints mechanism<br />
• Pilot program with third-party provider in China to<br />
implement local worker grievance hotline<br />
8
AE BETTER WORLD ABOUT US CORPORATE GOVERNANCE CODES & GOVERNANCE<br />
Corporate Governance (continued)<br />
Codes & Governance<br />
Code of Ethics<br />
The AEO, Inc. Code of Ethics outlines Company standards for acting in a legally<br />
and ethically appropriate manner. This Code applies to all associates, officers,<br />
suppliers and the Board of Directors of <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. and its<br />
subsidiaries. The Code sets forth written standards designed to deter wrongdoing<br />
and to promote honest and ethical conduct, legal and regulatory compliance, and<br />
full, fair, accurate, timely, and understandable Company public disclosure.<br />
All associates and directors of the company are required to report any known<br />
or suspected violations of the Code of Ethics. Violations may be reported<br />
anonymously through the AEO Hotline (1-888-587-3582) or online at www.<br />
aehotline.com.<br />
In addition, company policy forbids any company official to take any action in<br />
retaliation against an associate for reporting or threatening to report a violation<br />
of the Code of Ethics in good faith or for cooperating in any investigation of a<br />
violation of the Code. Any such retaliation is itself a violation of the Code.<br />
Vendor Code of Conduct<br />
The AEO, Inc. Vendor Code of Conduct is based on universally-accepted human<br />
rights and labor rights principles and sets forth our minimum expectations for<br />
suppliers. The Code must be posted in every factory that manufactures our clothes<br />
in the local language of the workers. All suppliers must contractually agree to abide<br />
by the terms of our Vendor Code of Conduct before we will place production with<br />
them.<br />
CORPORATE RESPONSIBILITY GOVERNANCE<br />
VP<br />
AEO PRODUCTION<br />
SR. DIRECTOR<br />
CORPORATE RESPONSIBILITY,<br />
TRADE & PRODUCT SAFETY<br />
COMPLIANCE<br />
BOARD OF DIRECTORS<br />
CEO<br />
EVP<br />
CHIEF OPERATING OFFICER<br />
NEW YORK DESIGN CENTER<br />
VP CORPORATE RESPONSIBILITY<br />
CUSTOMS COMPLIANCE OFFICER<br />
(AE, AERIE, AND 77KIDS)<br />
SR. MANAGER<br />
MERCHANDISE COMPLIANCE<br />
VP<br />
AERIE PRODUCTION<br />
The <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. Board of Directors’ Nominating and<br />
Corporate Governance Committee has ultimate oversight of policies and practices<br />
related to Corporate Responsibility.<br />
We also have a dedicated team based in the United States and Asia that is<br />
responsible for implementing and enforcing our Corporate Responsibility policies<br />
on a day-to-day basis. This team reports annually to the Board of Directors,<br />
independently of Production and Sourcing.<br />
Guy Bradford, Vice President of Corporate Responsibility and Customs<br />
Compliance Officer, leads our corporate responsibility and compliance divisions.<br />
He reports to Michael Rempell, Executive Vice President and Chief Operating<br />
Officer of the New York Design Center, who also oversees Production and Sourcing<br />
for the <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>® and Aerie® brands.<br />
9
AE BETTER WORLD ABOUT US CORPORATE GOVERNANCE CODES & GOVERNANCE<br />
Corporate Governance (continued)<br />
This organizational alignment is new as of July 2009. In the early days of our<br />
social and environmental compliance program, the Vice President of Corporate<br />
Responsibility and Customs Compliance Officer reported to the Chief Supply<br />
Chain Officer, who oversees logistics and is wholly independent of Production<br />
and Sourcing. We believed this independence was critical to establish a clear and<br />
autonomous social and environmental compliance function within our supply chain.<br />
However, over time these policies and procedures became embedded within our dayto-day<br />
operations. Today, for example, each new garment supplier must be inspected<br />
and approved by the Corporate Responsibility team before it can be “switched on” in<br />
our information technology system and receive production orders.<br />
In July 2009, we therefore evolved this reporting structure into its current form<br />
to strengthen alignment between the Corporate Responsibility teams and the<br />
Production and Sourcing teams. The teams are now “seated around the same<br />
table.” This builds stronger internal partnerships, which in turn leads to more<br />
informed sourcing strategies and streamlined purchasing practices. Although the<br />
Corporate Responsibility team still maintains a high degree of independence and<br />
autonomy (including its independent reporting channel to the Board of Directors),<br />
we believe this practical, day-to-day integration is a best practice to ensure greater<br />
alignment between Production and Corporate Responsibility goals.<br />
Another strength of our organization is that the Vice President of Corporate<br />
Responsibility and Customs Compliance Officer oversees other compliance<br />
functions, including trade policy and compliance, regulatory compliance, product<br />
safety, and merchandise payables. This breadth of authority provides deep insight<br />
into import and export processes and controls (such as transparency requirements<br />
for apparel and apparel components mandated by Free Trade Agreements and<br />
other trade preference programs), as well as final control over merchandise<br />
payables. In rare but serious instances where a supplier has committed an<br />
egregious compliance violation, the Vice President of Corporate Responsibility<br />
has the power to delay or withhold payment on purchase orders until the issue is<br />
resolved satisfactorily. This is a powerful tool of leverage, albeit one of last resort.<br />
NEXT Our Products<br />
10
AE BETTER WORLD ABOUT US OUR PRODUCTS<br />
Our Products<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is strongly committed to the safety and well being<br />
of our customers.<br />
We require our products to meet U.S. state and federal and Canadian national laws<br />
and regulations. In certain cases, we also voluntarily adopt industry standards<br />
and best practices that may be higher than legally required or where no clear laws<br />
exist. For example, we apply California Proposition 65 consent judgment standards<br />
to our products that are covered by a Proposition 65 consent judgment to which<br />
we are a party, even though not all of the Proposition 65 consent judgments apply<br />
outside of the state of California.<br />
To ensure compliance with our product safety standards, we maintain an extensive<br />
set of testing protocols for each category of products. All of the products we sell<br />
are tested by an independent testing laboratory in accordance with applicable<br />
regulatory requirements.<br />
Product Recalls<br />
In rare cases where a safety issue has been discovered in a product that has reached<br />
our store shelves, we respond with a comprehensive recall process for all of our<br />
brands. We have a system in place to identify the manufacturer(s) and production<br />
date(s) for our branded products. In the event of a product recall, we activate this<br />
system.<br />
We publicly maintain a list of product recalls conducted in conjunction with the<br />
Consumer Product Safety Commission (CPSC) here 27 on our e-commerce website.<br />
NEXT Public Policy<br />
27 http://www.ae.com/web/help/product_recalls.jsp?topic=1<br />
11
AE BETTER WORLD ABOUT US PUBLIC POLICY<br />
Public Policy<br />
As a responsible corporate citizen, we engage in public policy matters that are<br />
consistent with our values, principles, and business interests.<br />
We do not maintain a Political Action Committee (PAC), but we actively advocate<br />
our position on international trade, labor and employment, intellectual property,<br />
and other matters that affect our company, our associates, our customers and<br />
other stakeholders. We are members of and participate actively in several industry<br />
associations, government advisory boards, and multi-stakeholder organizations.<br />
Where necessary and appropriate, we develop relationships with government<br />
officials, elected representatives, and regulatory and administrative bodies, as well<br />
as multilateral institutions, non-governmental organizations (NGOs), industry and<br />
trade associations, and other stakeholders to engage in public policy dialogue.<br />
In addition, we join with non-governmental organizations (NGOs), trade unions,<br />
and/or other companies in bringing issues of serious concern to the attention<br />
of foreign governments. For example, in 2004, we co-signed a letter with other<br />
brands 28 to the President of the Philippines protesting police harassment of labor<br />
activists. In 2005, we co-signed a letter 29 expressing concern about the illegal<br />
incarceration of a Mexican trade union leader. We have also engaged in active<br />
dialogue with government and industry officials on the important issues of factory<br />
fire Safety in Bangladesh 30 and child labor in the cotton fields of Uzbekistan 31 .<br />
28 http://www.ae.com/Images/corpResp/images/about/philippines_company_joint_letter_110706.pdf<br />
29 http://www.ae.com/Images/corpResp/images/about/BrandsBarriosLetter.pdf<br />
30 Page 22<br />
31 Page 22<br />
Our Memberships and Associations<br />
National, Regional, and Local Business Associations<br />
• National Retail Federation (NRF)<br />
http://www.nrf.com<br />
• Retail Industry Leaders Association (RILA)<br />
http://www.rila.org/pages/default.aspx<br />
• United States Association of Importers of Textiles and Apparel (USA-ITA)<br />
http://www.usaita.com<br />
Government Advisory Committees and Boards<br />
• U.S. Department of Agriculture Cotton Board<br />
http://www.cottonboard.org<br />
• U.S. Trade Representative / U.S. Department of Commerce International Trade<br />
Advisory Committee on Textiles & Apparel (ITAC-13)<br />
http://www.trade.gov/itac/committees/ITAC13.TextilesandClothing.asp<br />
Corporate Responsibility Organizations<br />
• ILO/IFC Better Factories Cambodia / Better Work Program<br />
http://www.betterwork.org/EN/Pages/newhome.aspx<br />
• Fair Labor Association (FLA)<br />
http://www.fairlabor.org/fla/<br />
• Multi-Fiber Agreement (MFA) Forum<br />
http://www.mfa-forum.net<br />
• Responsible Cotton Network<br />
• Business for Social Responsibility (BSR)<br />
http://www.bsr.org<br />
NEXT Supply Chain<br />
12
AE BETTER WORLD SUPPLY CHAIN<br />
Supply Chain<br />
Made in Vietnam. Made in India. Made in<br />
Guatemala. Made in China.<br />
From jeans to hoodies, our clothes all have labels that hint at the different journeys<br />
they take in order to reach our store shelves. Our global supply chain is one of the most<br />
important tools we have to deliver the products that our customers love. However, a<br />
global reach brings with it a global responsibility to ensure that the people who make<br />
our clothes are treated with dignity and respect.<br />
Like our clothes, we have come a long way as a company. We conducted our first<br />
factory inspection in 2001. In 2002, we wrote our first Code of Conduct. Today, we<br />
have a Vendor Code of Conduct 32 , a dedicated team of people, and a comprehensive<br />
factory inspection, remediation, and training program focused on improving working<br />
conditions in the global apparel supply chain.<br />
Few factories, if any, are perfect. The root causes of poor working conditions are varied<br />
and complex, and we cannot hope to solve all of the problems alone. Most of the time,<br />
we are just one of several brands working with any given factory and our leverage to<br />
bring about positive change may be limited. However, we continue to learn from and<br />
partner with other companies and stakeholders who share our goals. While there is no<br />
single, one-size-fits-all answer, we are working to identify and implement solutions that<br />
have a positive impact in the lives of the people who make our clothes.<br />
NEXT Our Strategy<br />
32 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
13
AE BETTER WORLD SUPPLY CHAIN OUR STRATEGY<br />
Our Strategy<br />
TRANSPARENCY<br />
PARTNER WITH<br />
STAKEHOLDERS<br />
FACILITY TRAINING / IMPROVE<br />
POLICIES, PROCEDURES & SYSTEMS<br />
FACTORY INSPECTIONS<br />
Our strategy to improve apparel factory working conditions starts<br />
with factory inspections based on our Vendor Code of Conduct 33 . We<br />
then focus on remediating the issues we find during those inspections,<br />
which often includes additional factory training and capacity building<br />
programs.<br />
Unfortunately, we can’t solve all of the problems we find by working<br />
alone, so we partner with other brands and retailers, multi-stakeholder<br />
organizations, civil society groups, trade unions, governments, and others<br />
to better understand and address what is happening in the factories and<br />
countries where our clothes are made. Working together, we strive to<br />
collectively develop more sustainable solutions to the problems we find.<br />
Finally, we are committed to being transparent about how we are doing.<br />
We know that reporting publicly on our efforts is one of the most effective<br />
ways to ensure that we remain focused on our goals, disciplined in our<br />
efforts, and accountable for our performance.<br />
NEXT Working With Factories<br />
33 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
14
AE BETTER WORLD SUPPLY CHAIN WORKING WITH FACTORIES<br />
Working With Factories<br />
We do not own or operate any manufacturing facilities. Our branded products are<br />
produced by third-party contract manufacturers located in more than 20 countries<br />
around the world. In most cases, AEO, Inc.’s production comprises only a small<br />
percentage of a supplier’s total production.<br />
Vendor Code of Conduct<br />
Our Vendor Code of Conduct 34 is based on universally-accepted human rights<br />
principles and sets forth our minimum expectations for suppliers. The Code must<br />
be posted in every factory that manufactures our clothes in the local language of<br />
the workers. All suppliers must contractually agree to abide by the terms of our<br />
Vendor Code of Conduct before we place production with them.<br />
In 2010, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. joined the Fair Labor Association (FLA) 35 .<br />
As part of that commitment, we are working to bring our Vendor Code of Conduct<br />
into full alignment with the FLA’s Code of Conduct.<br />
Our Team<br />
We have a small team of people based in the United States and Asia who are<br />
dedicated to improving the lives of garment workers. They spend much of their<br />
time visiting factories, conducting inspections, meeting with factory management<br />
and speaking with workers.<br />
Every day, our team members gather invaluable real-time information about the<br />
workplaces around the world where our clothes are made.<br />
“There are many reasons why I love my job, but top of the list is that I<br />
am encouraged to be creative, emboldened to be visionary, and paid<br />
to contribute to a fairer, safer and cleaner world.”<br />
- MAY L., CORPORATE RESPONSIBILITY<br />
34 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
35 http://www.fairlabor.org/fla<br />
Our Factory Inspection Program<br />
We believe that the workers who make our clothes should be treated with dignity<br />
and respect. To that end, we maintain an extensive factory inspection program to<br />
monitor compliance with our standards. In FY 2010, we conducted 349 inspections<br />
in 329 factories around the world.<br />
“As a compliance auditor, I spend many exhausting hours traveling<br />
to and from factories. But when I see positive change in a factory<br />
manager’s mindset or a better environment for workers, it makes me<br />
proud of my contribution and keeps me passionate about my work.”<br />
- RITA T., CORPORATE RESPONSIBILITY<br />
Factory inspections are just the first step towards improving working conditions.<br />
Once compliance issues have been identified, we work with our suppliers to<br />
improve policies, processes, and management systems to correct non-compliance<br />
problems and help to ensure that they won’t recur again in the future.<br />
The Root Causes of Poor Factory Working Conditions<br />
Few factories, if any, are perfect. Working conditions vary dramatically from<br />
country to country, region to region, and factory to factory. Many times, despite<br />
our best inspection efforts, factories are still not as good as we would like them to<br />
be. The reasons for this are varied and complex. Some of the factors that contribute<br />
to poor working conditions in global apparel factories include: unreasonable<br />
expectations by brands and retailers regarding cost and speed to market; poor<br />
management systems and/or inefficient and outdated production processes by<br />
factories; strong industry price competition and uneven enforcement of standards;<br />
outdated national labor and environmental laws and poor law enforcement by host<br />
country governments; and complex international trade rules that place high import<br />
tariffs and/or significant paperwork burdens on imported apparel products.<br />
There are no easy fixes. However, by addressing challenges as they arise and<br />
continuing to partner with our suppliers wherever possible, we are striving to bring<br />
about an environment of continuous improvement in our supply chain.<br />
15
AE BETTER WORLD SUPPLY CHAIN WORKING WITH FACTORIES OUR FACTORY INSPECTION PROGRAM<br />
Working With Factories (continued)<br />
Our Factory Inspection Program<br />
FACTORY APPROVAL PROCESS<br />
New garment factories must pass an initial inspection in order to do business<br />
with us. In FY2010, we evaluated 77 new factories. Of these, 17% were unable or<br />
unwilling to meet the standards required to pass our inspections and were not<br />
approved for AEO, Inc. production.<br />
FACTORY DOES<br />
NOT MEET STANDARDS<br />
CORRECTIVE ACTION<br />
PLAN ISSUED,<br />
CAP FOLLOW UP OCCURS,<br />
RE-INSPECTION OCCURS<br />
NOTE:<br />
MUST EVENTUALLY PASS OR WILL<br />
NOT BE APPROVED FOR PRODUCTION<br />
PRODUCTION TEAM<br />
REQUESTS NEW FACTORY<br />
COMPLIANCE<br />
CONDUCTS INSPECTION<br />
ANNUAL INSPECTION<br />
CYCLE INITIATED<br />
FACTORY MEETS STANDARDS<br />
FACTORY ACTIVATED FOR ORDERS<br />
Ongoing Factory Inspections<br />
Once garment factories are approved, we strive to re-inspect them at least once a<br />
year. While we occasionally are unable to get to a factory in a particular year, we<br />
work with third-party auditors and independent locally-based monitors to make<br />
our best effort to meet this goal.<br />
We review the outcome of these inspections with factory management with the<br />
goal of helping them to continuously improve their performance. We recognize<br />
that compliance may not be achieved immediately, but our strong preference is to<br />
keep working with factories to help them improve over time.<br />
“In recent years, we have noticed that AEO has become more<br />
understanding of compliance realities in the factory. They now look<br />
beyond the “pass” and “fail” of compliance and have been more<br />
supportive in giving advice so that the factories can improve in their<br />
CSR efforts.”<br />
- A KOREAN SUPPLIER<br />
Unfortunately, there are some instances where a factory is unable or unwilling<br />
to meet our standards. In those cases, we will take steps up to and including the<br />
severance of our business relationship. In FY2010, we terminated our business<br />
relationship with 9 factories, approximately 2.7% of our total active supplier base,<br />
for compliance violations. For more information on the types of non-compliance<br />
issues we find during factory inspections, please see Our Performance 36 .<br />
36 Page 24<br />
16
AE BETTER WORLD SUPPLY CHAIN WORKING WITH FACTORIES FACTORY TRAINING & CAPACITY BUILDING<br />
Working With Factories (continued)<br />
Factory Training & Capacity Building<br />
When we conduct factory inspections, the last thing we want to see is a factory that<br />
has the same problem year after year. So, we strive to work with factories to identify<br />
ways to help them address some of the root causes of compliance problems.<br />
Supplier Meetings<br />
We regularly hold on-boarding meetings for new vendors and regional trainings<br />
for existing suppliers on our Vendor Code of Conduct 37 and the policies outlined in<br />
our corporate vendor manual. Our goal is to help suppliers better understand our<br />
requirements when they enter into a business relationship with us.<br />
“[When we compare] our operations today to 5 years ago, we believe<br />
that communication between the factory management and the<br />
workers has improved. Since communication is the key ingredient in a<br />
smooth operation, [we have experienced] many positive effects from<br />
this improvement, including a lower turnover rate and higher worker<br />
satisfaction. In addition, constant management of health & safety<br />
issues has improved the working environment.”<br />
- A KOREAN SUPPLIER<br />
Chinese Labor Law Training<br />
On January 1, 2008, the Chinese government implemented a new series of labor<br />
laws. Many of our suppliers had trouble understanding how to comply with the<br />
new regulations. In October 2008, our global and local team members partnered<br />
with Business for Social Responsibility (BSR) 38 and the China Training Institute<br />
(CTI) 39 to conduct a labor contract law implementation seminar in Shenzhen,<br />
China.<br />
Several experts, including the Chief Officer of China’s Human Resource and Social<br />
Insurance Ministry Labor Law Research Center, provided guidance to many of<br />
our key suppliers in the region. The session sparked an interactive discussion that<br />
37 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
38 http://www.bsr.org/<br />
39 http://ctichina.org/v2/en<br />
proved successful in clarifying many outstanding questions about the new Chinese<br />
labor laws and helped facilitate a new spirit of synergy and partnership.<br />
Transitioning to the Better Factories Cambodia Program<br />
In July 2009, we brought together our suppliers in Cambodia to launch our<br />
membership in the International Labor Organization (ILO)’s Better Factories<br />
Cambodia (BFC) 40 program. Two management representatives from each supplier,<br />
along with key ILO representatives, participated in an interactive discussion that<br />
outlined the benefits of the BFC program.<br />
We outlined our commitment to BFC and had a lively discussion about what<br />
this would mean to suppliers - in particular, that we would be relying on BFC<br />
inspection results instead of our own to help reduce supplier “audit fatigue”.<br />
We also encouraged suppliers to review the suite of advisory and training services<br />
offered by the Better Factories Cambodia team and offered our assistance in<br />
helping them to identify or schedule in-factory training that would have real,<br />
meaningful impact for their workers.<br />
“It is important for brands to set up programs to help factories<br />
continuously improve and to narrow the gap among different brand<br />
requirements and legal requirements. [But] we wish more brands<br />
would reduce the frequency and duplication of their audits when<br />
factories demonstrate that they meet brand requirements.”<br />
- A CHINESE SUPPLIER<br />
Pilot Program on Workers Grievances<br />
Effective grievance mechanisms are one of the most important tools any<br />
organization has to ensure that workers’ voices are heard. Unfortunately, many<br />
garment factories around the world still have only rudimentary channels for<br />
workers to communicate their thoughts and concerns to management. When these<br />
channels are ineffective, workers may need to seek out external mechanisms, such<br />
as a brand or retailer that contracts with the factory.<br />
40 http://www.betterfactories.org/<br />
17
AE BETTER WORLD SUPPLY CHAIN WORKING WITH FACTORIES FACTORY TRAINING & CAPACITY BUILDING<br />
Working With Factories (continued)<br />
In 2011, we launched a pilot project to provide workers in approximately twelve<br />
approved garment factories in China with access to an independent hotline<br />
managed by two external organizations. The organizations will immediately report<br />
to us serious concerns raised by workers, and all concerns on a monthly basis. We<br />
will also partner with these organizations to provide relevant awareness training in<br />
factories based on the issues raised.<br />
Our goal is to encourage the factories in this pilot program to foster an<br />
environment in which workers feel comfortable raising and discussing labor and<br />
social issues in a constructive manner. We will also work with suppliers to redesign<br />
their own internal grievance procedures so that they can ultimately manage<br />
effective internal communication channels independently.<br />
We are still in the early phases of this project. We look forward to updating on our<br />
progress in future reports.<br />
Getting an Accurate Picture of Factory Conditions<br />
One of the most challenging issues we face is obtaining access to accurate factory<br />
records during inspections. Unfortunately, some factories have adapted to Code of<br />
Conduct inspections over the years not by fixing problems but by creating false sets<br />
of documents that show perfect (but fake) overtime and wage records.<br />
We believe that this is one of the worst practices a factory can undertake. Resolving<br />
non-compliances is never easy - but it is impossible to help factories improve when<br />
we can’t get a true picture of what is going on inside the factory. In 2010, we took a<br />
strong stance on this issue. We informed suppliers that failure to show accurate sets<br />
of books would result in a significant penalty - up to and including termination<br />
of our business relationship. To promote disclosure, we assured factories that the<br />
penalty of not showing accurate records would be far worse than any instances of<br />
non-compliance these records might reveal, and that we are committed to working<br />
with them to continuously improve whatever problems are uncovered.<br />
Rita’s Experience with Factory Transparency<br />
The following story from one of our Asia-based team members highlights the<br />
challenges we face in this area.<br />
“When talking about false records, I often say that the problem is easy<br />
to understand but hard to correct. One factory that we have been<br />
working with for two years in China provides a good example of the<br />
challenges we face.”<br />
“From 2009 to January 2011, we visited Factory X in China every four<br />
months. During the first few visits, we always found inconsistencies in<br />
the factory records. We struggled to convince the factory managers<br />
to provide us with accurate payroll information because they didn’t<br />
fully believe that we wanted to work with them to fix the problems -<br />
and that we wouldn’t punish them for the non-compliances that the<br />
records revealed. We spent a lot of time and effort over many months<br />
trying to gain their trust, explain our approach, and help to change<br />
their mindset. Finally, they agreed, and gave us the true payroll<br />
records.”<br />
“As expected, we found some wage and hour problems, but we are<br />
now working together with factory management on a corrective action<br />
plan. We’ve asked the factory to update us monthly on their progress.<br />
In addition, the factory management decided to establish a committee<br />
with direct oversight for workplace health and safety- because health<br />
and safety was another area where they were having repeated noncompliances.<br />
The factory management successfully identified that the<br />
root cause of those problems was that no one had direct responsibility<br />
for health and safety issues in the factory.”<br />
“After two years, we are finally starting to see positive, incremental<br />
improvement on wage, hour, and health and safety issues in Factory<br />
X. There is still more work to be done, but I believe by gaining the trust<br />
of Factory X’s management and working with them to identify the root<br />
causes of issues, we have overcome the hardest part of the problem.”<br />
NEXT How Our Products Are Made<br />
18
AE BETTER WORLD SUPPLY CHAIN HOW OUR PRODUCTS ARE MADE<br />
How Our Products Are Made<br />
Developing an efficient process to bring our design concepts to market is one of<br />
the most critical aspects of our business. If we’re late in deciding which graphic<br />
t-shirt or what denim style to put in our stores next season, we may also make it<br />
more difficult for our suppliers to make those products and deliver them to us on<br />
time. The good news is that improving our product pipeline is a win-win for us<br />
and our suppliers. Learn more about how we’re working to make smarter business<br />
decisions 41 .<br />
NEXT Making Smarter Business Decisions<br />
41 Page 19<br />
19
AE BETTER WORLD SUPPLY CHAIN HOW OUR PRODUCTS ARE MADE MAKING SMARTER BUSINESS DECISIONS<br />
How Our Products Are Made (continued)<br />
Making Smarter Business Decisions<br />
Nothing is more important to the success of our business than getting the right<br />
product in our stores at the right time. In an industry as competitive as ours -<br />
and with cotton prices and fuel prices on the rise - we have to be quick, flexible,<br />
innovative, and smart about how we do our job. We have to make better decisions<br />
faster, build stronger relationships with the best suppliers around the world, and<br />
manage the many moving parts of our supply chain more effectively.<br />
Streamlining Internal Decisions<br />
In 2010, we began taking several steps to streamline our design and product<br />
development process. First, we took a hard look at our product development<br />
calendar. To reduce time to market and get fresh designs into stores faster, we<br />
needed to better align our internal timelines and eliminate unnecessary and<br />
redundant meetings. At the same time, we also found that we needed to hold<br />
people more accountable for making decisions at major milestones. Our design,<br />
merchandising, and production teams had to develop consensus more quickly<br />
on the specific products to be included in our store assortment each season. To<br />
that end, we have introduced opportunities for closer collaboration earlier in the<br />
product development cycle and built in executive review earlier in the calendar. We<br />
even asked some design and production teams to move offices and sit together so<br />
that they could work more closely on a day-to-day basis.<br />
Strengthening Supplier Relationships<br />
We’ve been working hard over the past couple of years to build stronger business<br />
relationships with the right suppliers around the world. We’re reducing the number<br />
of new suppliers that we bring into our sourcing base each year while expanding<br />
our business with key vertical suppliers who have direct access to yarns and<br />
fabrics. We’re also working to provide more consistent production orders and<br />
greater assurance to suppliers that we are in this for a longer-term relationship. We<br />
believe these deeper partnerships offer more speed and flexibility to get our clothes<br />
to market and the opportunity to chase trends, while providing our suppliers<br />
with greater visibility into future order volumes and the ability to better manage<br />
production schedules. As these strategic suppliers get to know our products, we<br />
also collaborate more effectively on design and fabric innovation.<br />
In addition, we’ve expanded our use of supplier performance data in our decisionmaking.<br />
Every quarter - and often on a more frequent basis - our Corporate<br />
Responsibility team sits down with each of our production divisions to discuss<br />
supplier performance in each apparel product category. When major compliance<br />
concerns arise, the teams work together to develop a joint message requiring<br />
supplier corrective action and improvement. The Corporate Responsibility team<br />
also highlights top supplier social performers who may be good candidates to<br />
consider for business expansion.<br />
No relationship can thrive without good, honest communication. To that end, we<br />
are assessing and introducing new ways to facilitate ongoing conversation and<br />
feedback with our suppliers. In August 2011, we held our second biannual Vendor<br />
Summit to share company goals, business trends, and future expectations and<br />
opportunities and asked our suppliers to provide constructive feedback about ways<br />
in which we can improve our business relationships.<br />
Improving Material Management<br />
In today’s world, it is more important than ever that we have ready access to the<br />
materials we need to produce the products that our customers love. So, we’ve had<br />
to become smarter about how we manage the materials and components that are<br />
the building blocks of our clothes, especially fabric. We’ve begun to implement a<br />
more robust fabric platforming process that allows us to react quickly to changing<br />
customer desires without compromising quality or compliance. We’re working to<br />
consolidate core materials across departments and streamline testing procedures.<br />
This active approach to managing materials reduces our exposure to market<br />
fluctuations, promotes more flexible production schedules and helps us to manage<br />
our inventory more efficiently, while at the same time bringing better quality and<br />
consistency and reducing some of the “middlemen” in the supply chain.<br />
20
AE BETTER WORLD SUPPLY CHAIN LEVERAGING COLLECTIVE EFFORTS<br />
Leveraging Collective Efforts<br />
Over the years, we’ve learned that we cannot hope to drive sustainable, positive<br />
change in the world’s garment factories unless we partner with others in our industry,<br />
civil society, and governments to leverage our efforts and address problems together.<br />
To that end, we work with human rights and labor leaders, civil society organizations,<br />
and government officials on issues of mutual concern on an ongoing basis.<br />
ILO Better Factories Cambodia/Better Work Program<br />
In 2009, we signed the International Buyers Principles 42 of the International Labor<br />
Organization (ILO) Better Work program. Today, we are an active participant in<br />
the ILO Better Factories Cambodia (BFC) and Better Work programs in Vietnam,<br />
Haiti, and Indonesia. As of the fall of 2010, we had encouraged more factories to<br />
join the Better Work program than all but one other participating company. We<br />
look forward to the continued expansion of Better Work to additional countries.<br />
Fair Labor Association (FLA)<br />
In 2010, AEO, Inc. became a Participating Company in the Fair Labor Association.<br />
The FLA is a nonprofit organization dedicated to ending poor conditions in<br />
factories worldwide. As a member of the FLA, we are subject to Independent<br />
External Monitoring (IEM) by FLA-accredited monitors, a process that provides an<br />
additional level of public verification and accountability to our program. The FLA<br />
discloses the results of IEMs conducted for participating companies on its website.<br />
We look forward to working with the many stakeholders of the FLA to help protect<br />
workers’ rights and continue to improve working conditions worldwide.<br />
“As a Participating Company in the Fair Labor Association, AEO<br />
has demonstrated a commitment to improving working conditions<br />
worldwide. Involving brands in multi-stakeholder efforts such as<br />
the FLA will drive long-lasting change for the industry as a whole,<br />
strengthening social compliance programs and protecting workers<br />
throughout the global supply chain.”<br />
- AURET VAN HEERDEN, PRESIDENT, FAIR LABOR ASSOCIATION<br />
42 http://www.betterwork.org/EN/buyers/Pages/BuyersPrinciples.aspx<br />
Multi-Fiber Arrangement (MFA) Forum Americas Working Group<br />
We participate actively in the Multi-Fiber Arrangement (MFA) Forum Americas<br />
Working Group, a group of several brands and retailers as well as trade unions,<br />
including the International Textile Garment and Leather Workers Federation<br />
(ITGLWF) 43 , and civil society organizations such as the Maquila Solidarity<br />
Network (MSN) 44 to address a range of compliance issues in Mexico and Central<br />
America, including workers’ right to freedom of association.<br />
“The Maquila Solidarity Network (MSN) has been engaging with<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> (AEO) about worker rights issues since<br />
2006. In a number of cases, AEO has responded to requests from<br />
MSN by joining with other brands in calling on shared suppliers to<br />
respect workers’ associational rights and on governments to put a<br />
stop to violence and repression against workers and labour rights<br />
defenders. AEO has also joined with other companies and labour and<br />
non-governmental organizations, including MSN, in multi-stakeholder<br />
initiatives like the MFA Forum, which promoted responsible<br />
competitiveness strategies in garment producing countries immediately<br />
after the phase out of the Multi-Fibre Arrangement. In Mexico, one<br />
focus of the committee’s work has been on how to address systemic<br />
violations of freedom of association.”<br />
“To build on this good record, AEO must devote sufficient resources to<br />
addressing critical supply chain issues, including issues such poverty<br />
wages, precarious work and the general lack of respect for freedom<br />
of association in global supply chains. We also hope AEO will become<br />
more transparent on the locations of its supplier factories and the<br />
steps it is taking to improve its purchasing practices and to ensure that<br />
its sourcing decisions benefit, rather than victimize, workers and good<br />
suppliers.”<br />
- LYNDA YANZ, COORDINATOR, MAQUILA SOLIDARITY NETWORK<br />
43 http://www.itglwf.org/<br />
44 http://en.maquilasolidarity.org/<br />
21
AE BETTER WORLD SUPPLY CHAIN LEVERAGING COLLECTIVE EFFORTS<br />
Leveraging Collective Efforts (continued)<br />
Responsible Cotton Network<br />
In 2008, a group of socially responsible investors and civil society organizations<br />
brought to our attention the practice of forced child labor in the cotton fields of<br />
Uzbekistan. Deeply disturbed by the images we saw and reports we heard, we<br />
adopted a policy in June 2008 45 banning the use of cotton from Uzbekistan in<br />
all products manufactured for <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. Since that time,<br />
we have been active participants in the multi-stakeholder Responsible Cotton<br />
Network, which is a joint initiative of several brands, investors, non-governmental<br />
organizations, and trade unions. Under this umbrella, we have engaged with<br />
government officials in both the US and Uzbekistan in an effort to convince the<br />
Government of Uzbekistan to put a stop to this unacceptable practice.<br />
Fire Safety in Bangladesh<br />
In December 2010, a tragic factory fire in Dhaka, Bangladesh, resulted in the<br />
deaths of more than two dozen garment workers. Although <strong>American</strong> <strong>Eagle</strong><br />
<strong>Outfitters</strong>, Inc. had never worked with that particular factory, we recognized<br />
that the tragedy highlighted the ongoing, critical need to ensure adequate worker<br />
protection and fire safety in Bangladesh.<br />
We therefore joined with a large group of other brands and retailers to help<br />
bring together key suppliers, industry association leaders, and representatives<br />
of the Bangladeshi government to urge them to begin taking meaningful action<br />
to help prevent similar tragedies from happening again. Following an initial<br />
meeting in February 2011, we issued a joint statement 46 emphasizing the need for<br />
a collaborative process to ensure the sustainability of long term efforts to improve<br />
fire safety within the Bangladesh garment industry.<br />
When a new president assumed leadership of the powerful Bangladesh Garment<br />
Manufacturers Exporters Association (BGMEA) later in 2011, we also joined with<br />
other brands in co-signing a letter 47 asking him to lead the local industry in taking<br />
45 http://www.ae.com/Images/corpResp/images/supply_chain/Uzbek_CottonLetter.pdf<br />
46 http://www.ae.com/Images/corpResp/images/supply_chain/Bangladesh_Statement.pdf<br />
47 http://www.ae.com/Images/corpResp/images/supply_chain/Joint_Letter_BGMEA_President.pdf<br />
a proactive, collaborative role to strengthen building, systems, and fire safety<br />
within the Bangladeshi garment industry.<br />
Our collaborative work on this critical issue remains ongoing.<br />
Sandblasting<br />
In early 2011, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> decided to join other leading companies<br />
in our industry to eliminate sandblasting from our denim manufacturing process.<br />
Sandblasting is a common technique used to create the “worn” look of jeans.<br />
Sandblasting involves high-pressure spraying of abrasive material on denim fabric.<br />
During the sandblasting process, factory workers must wear highly specialized<br />
equipment to protect themselves from potentially serious health effects that<br />
can result from exposure to silica, a component found in sand. Sandblasting<br />
can be done safely, but proper health and safety precautions must be rigorously<br />
maintained. Unfortunately, despite extensive oversight by many companies -<br />
including <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. - to ensure that all workers have access to<br />
and use proper equipment, we have been unable to ensure compliance in all cases.<br />
Every pair of jeans is unique. Like good red wine, jeans age well. One of the<br />
reasons our customers love our denim is because it helps them live their life more<br />
comfortably. The good news is that we can use alternative techniques to create the<br />
same comfortable jeans without sandblasting. We believe our customers not only<br />
want to live their lives comfortably, but also in a better world.<br />
Until we believe that proper controls can be put in place to ensure that sandblasting<br />
is done safely, we are no longer developing new denim styles with sandblasting.<br />
“Sumangali” Schemes<br />
“Sumangali” is a Tamil word that means a married woman who lives a fulfilling<br />
life with her husband. Unfortunately, in parts of India, it has become the name<br />
of schemes used to recruit young women into contractual working arrangements<br />
in fabric mills and yarn spinners in exchange for a promised lump sum payment<br />
at the end of their contracts. This lump sum is marketed by factories as potential<br />
22
AE BETTER WORLD SUPPLY CHAIN LEVERAGING COLLECTIVE EFFORTS<br />
Leveraging Collective Efforts (continued)<br />
dowry - a practice which remains common in parts of India even though it has<br />
been officially prohibited since 1961.<br />
In 2011, several civil society organizations brought to our attention that these<br />
women face poor working conditions that include excessive overtime, low wages,<br />
and restricted freedom of movement.<br />
We care deeply about the welfare of the people in our supply chain. We<br />
immediately initiated an investigation that included on-site assessments of any<br />
factories we contract with in the region who might work with yarn spinners or<br />
fabric mills practicing this scheme. We also began engaging local NGOs, local<br />
governments and industry associations, other brands, and through the Fair Labor<br />
Association (FLA) to better understand ongoing efforts and context in the region.<br />
As of the date of this report, our investigation is ongoing.<br />
NEXT Our Performance<br />
23
AE BETTER WORLD SUPPLY CHAIN OUR PERFORMANCE<br />
Our Performance<br />
Measuring and analyzing supplier performance is a critical part of our Corporate<br />
Responsibility program. We firmly believe that “what gets measured gets<br />
managed.” We use this information not only to assess new manufacturers who<br />
seek to become approved suppliers, but also how existing suppliers are performing<br />
over time. Regular review and analysis of this data not only helps our team identify<br />
regions or issues that may need special attention, but also drives our discussions<br />
with Production and Sourcing and decisions about where to place our business.<br />
Some of the key metrics that we use to assess the performance of our suppliers on<br />
labor standards and working conditions can be found in the drop down box below.<br />
“When I visit factories, I look at workers’ faces and smile at them.<br />
Sometimes they smile back, sometimes they hesitate. I also approach<br />
them and shake hands, which puts them a little more at ease. I think<br />
it is these moments of interaction that keep me fresh and committed<br />
to the work I do. I have been doing this work for many years and<br />
yet I still believe we have the power to change people’s lives here at<br />
<strong>American</strong> <strong>Eagle</strong> - a power that, when used wisely, just might change<br />
the world for the better.”<br />
- AYKUT K., CORPORATE RESPONSIBILITY<br />
24
AE BETTER WORLD SUPPLY CHAIN OUR PERFORMANCE<br />
Our Performance<br />
Factory Approval Statistics<br />
This chart shows the percentage of factories, by region, that we inspected in FY2010 as part of our New Factory<br />
Approval Process.<br />
REGION NEW FACTORIES APPROVED NOT APPROVED PENDING<br />
China & North Asia 39 67% 23% 10%<br />
Americas 7 86% 14% 0%<br />
South Asia 19 69% 5% 26%<br />
Southeast Asia 12 50% 17% 33%<br />
Europe, Middle East & Africa 0 N/A N/A N/A<br />
TOTAL 77 66% 17% 17%<br />
The data show a below average rate of non-approved factories in the South Asia region. Our team has initiated<br />
a series of focused inspections in India, Bangladesh, and Pakistan to ensure that we are assessing factory<br />
compliance levels accurately.<br />
25
AE BETTER WORLD SUPPLY CHAIN OUR PERFORMANCE<br />
Our Performance (continued)<br />
Ongoing Inspection Coverage<br />
We strive to re-inspect approved garment factories at least once a year. While we occasionally are unable to get<br />
to a factory, our internal inspection team partners with third-party auditors and independent, locally-based<br />
monitors to make our best effort to meet this goal. In FY2010, we inspected 98% of garment factories that were<br />
part of our base for the entire year.<br />
REGION ACTIVE FULL YEAR<br />
# OF FACTORIES<br />
PERCENTAGE<br />
% VISITED<br />
ACTIVE PART YEAR<br />
# OF FACTORIES*<br />
PERCENTAGE<br />
% VISITED<br />
TOTAL<br />
FACTORIES<br />
Americas 8 87.5 14 64.3 2<br />
China & North Asia 83 100 102 68.6 185<br />
Europe, Middle East & Africa 2 100 3 33.3 5<br />
South Asia 21 100 38 60.5 59<br />
Southeast Asia 31 **93.5 27 70.4 58<br />
TOTAL 145 97.9 184 66.3 329<br />
* This column reflects turnover in our supplier base attributed to business needs.<br />
** This percentage includes two factories participating in ILO Better Work programs that had not yet been assessed by Better Work teams.<br />
26
AE BETTER WORLD SUPPLY CHAIN OUR PERFORMANCE<br />
Our Performance (continued)<br />
Non-Compliance Findings<br />
The chart below shows non-compliances identified in our approved supplier base during ongoing annual inspections.<br />
No Non-Compliances<br />
Identified<br />
REGION<br />
Worker Age Verification Documentation<br />
Child Labor / Workers Under the Legal Age Employed<br />
Hours of Work<br />
Minimum Wages<br />
Occupational Health & Safety Emergency System<br />
Management<br />
Occupational Health & Safety Fire Safety<br />
Infrastructure<br />
Occupational Health & Safety Workfloor & Other<br />
Employee Areas<br />
Disciplinary Practices<br />
Discriminatory Hiring and Employment Practices<br />
Dormitories<br />
Environmental Health & Safety<br />
Forced Labor, Mandatory Overtime or Restricted<br />
Liberties<br />
Freedom of Association<br />
Insurance & Benefits<br />
Local law, Code & Labor Contract Violations<br />
Unauthorized Subcontracting<br />
Non-Compliances in<br />
1-24.99% of Factories<br />
CHINA & NORTH<br />
ASIA<br />
AMERICAS<br />
Non-Compliances in<br />
25-50% of Factories<br />
EUROPE,<br />
MIDDLE EAST &<br />
AFRICA<br />
Non-Compliances in More<br />
than 50% of Factories<br />
SOUTH ASIA SOUTHEAST ASIA<br />
27
AE BETTER WORLD SUPPLY CHAIN OUR PERFORMANCE<br />
Our Performance (continued)<br />
Underage Labor<br />
We identified nine instances of underage labor in FY2010, all of which took place in China. In three cases,<br />
the factories fully implemented our remediation policy, which requires that the child be removed from the<br />
workplace immediately, given access to schooling, paid full wages up to the age of legal employment, and<br />
guaranteed a position at the factory once he/she reaches the legal working age. In the other six cases, the<br />
factories were unwilling to take some or all of these steps, forcing us to terminate our business relationship. We<br />
believe these cases stem from the significant labor shortages that have impacted certain regions in China.<br />
Working Hours<br />
Excessive working hours continue to be a significant challenge in our industry. We have been working to better<br />
identify the root causes of this problem, which range from poor production planning and inefficient practices<br />
at the factory level to overbooking, unrealistic timeframes, or last-minute changes to purchase orders by<br />
merchandising and production teams. For more information on what we are doing to streamline our business<br />
practices, please see Making Smarter Business Decisions.<br />
Freedom of Association<br />
We believe that issues related to freedom of association are more widespread in our supply chain than this chart<br />
suggests. In addition, this chart does not identify regions where freedom of association is unlawful. We are<br />
working to revise our inspection protocols to capture concerns related to freedom of association more accurately.<br />
In addition, we are working through multi-stakeholder organizations to tackle challenges in specific countries.<br />
For more information on what we are doing about protection contract issues in Mexico, please click here 48 .<br />
Occupational Health & Safety<br />
Adequate infrastructure and management systems to ensure the safety of workers in the event of a fire remain a<br />
challenge in all regions. The number of occupational health & safety related issues we found in FY2010 tells us<br />
that supplier management systems are inadequate across much of our supplier base. We are working through<br />
training and on-site engagement to help ensure that factories have processes in place for pro-actively addressing<br />
these items. For more information on our efforts to address this problem, particularly in Bangladesh, please see<br />
Leveraging Collective Efforts.<br />
Local Law, Code, and Labor Contract Violations<br />
In FY2010, we identified several cases in which factories were unable to produce acceptable labor contracts or<br />
were lacking complete employee records. We believe this is due in part to improper usage of temporary worker<br />
arrangements. This is an important issue which we are currently working to tackle more effectively in our<br />
inspection process and with our multi-stakeholder partners.<br />
48 http://www.ae.com/Images/corpResp/images/supply_chain/protectioncontracts.pdf<br />
28
AE BETTER WORLD SUPPLY CHAIN OUR PERFORMANCE<br />
Our Performance (continued)<br />
Factory Ratings<br />
One of the most important ways we assess factory performance is through overall ratings that aggregate noncompliances<br />
and best practices identified during inspections. These ratings are an important tool to help us<br />
analyze how individual factories perform from year to year, as well as overall performance levels in our supply<br />
chain.<br />
One notable point is that new factories that have not yet been approved for production rate significantly lower<br />
than factories that are approved and have worked with us for a period of time. We believe this demonstrates<br />
that our new factory inspection process not only helps to weed out the worst factories, but also that approved<br />
factories that work with our Corporate Responsibility team over time do show measurable improvement in<br />
working conditions.<br />
29
AE BETTER WORLD SUPPLY CHAIN OUR PERFORMANCE<br />
Our Performance (continued)<br />
Supplier Regions & Countries<br />
The following table and map illustrate countries and regions where we had at least one active supplier in<br />
FY2010. All data in this report is reported according to these regions.<br />
NEXT Supply Chain Security<br />
30
AE BETTER WORLD SUPPLY CHAIN SUPPLY CHAIN SECURITY<br />
Supply Chain Security<br />
Security concerns are an unfortunate reality in today’s global supply chains.<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is committed to ensuring the security of the cargo<br />
and people throughout our supply chain. For us, taking steps to ensure that illegal<br />
weapons and contraband do not enter our country through our nation’s ports is an<br />
important part of being a good corporate citizen.<br />
AEO, Inc. is a Tier 3 member of the U.S. Customs-Trade Partnership Against<br />
Terrorism (C-TPAT) 49 program - the highest ranking awarded by Customs<br />
and Border Protection (CBP), a division of the US Department of Homeland<br />
Security. We work with our suppliers and third-party logistics and transportation<br />
partners to develop and implement programs designed to enhance security<br />
throughout the supply chain in accordance with C-TPAT guidelines and security<br />
recommendations. At a minimum, AEO, Inc. suppliers agree to comply with<br />
C-TPAT minimum security guidelines. Suppliers must also agree to provide us<br />
with details of their in-house security programs and to give us or our designee<br />
(including U.S. Customs & Border Protection officials) access to records and<br />
facilities to verify the implementation of such programs.<br />
We work with our suppliers on an ongoing basis to modify and enhance security<br />
program standards to align with U.S. Customs & Border Protection and/or World<br />
Trade Organization (WTO) requirements.<br />
NEXT Supply Chain Goals<br />
49 http://www.cbp.gov/xp/cgov/trade/cargo_security/ctpat/what_ctpat/ctpat_overview.xml<br />
31
AE BETTER WORLD SUPPLY CHAIN SUPPLY CHAIN GOALS<br />
Supply Chain Goals<br />
2011-12 Supply Chain Goals<br />
• Develop and implement new information technology database system to enhance<br />
collection, analysis, and reporting of factory performance data.<br />
• Strengthen efforts to address social compliance issues in deeper tiers of the supply<br />
chain including, but not limited to, unauthorized subcontractors, laundries,<br />
embroiderers, fabric mills, informal workers, etc.<br />
• Evolve factory inspection and assessment model to enhance identification of root<br />
causes of compliance issues and develop more systematic training and capacity<br />
building programs to improve factory management systems to sustain compliance<br />
over time.<br />
• Enhance integration of corporate responsibility and social compliance issues<br />
into day-to-day business process such as sourcing strategy and decision making;<br />
enhance awareness of decision making impact by designers and merchants on<br />
factory production schedules.<br />
NEXT Environment<br />
32
AE BETTER WORLD ENVIRONMENT<br />
Environment<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is committed to<br />
developing better business practices to promote a<br />
cleaner and healthier planet.<br />
We hear repeatedly from associates and customers through social media, focus groups, and internal<br />
surveys that they want us to take meaningful steps to respect our environment. Although we are still<br />
in the early stages of implementing our environmental strategy, we are encouraged by progress from<br />
our initial efforts and continue to explore additional ways to reduce our environmental footprint. Our<br />
associates are our greatest asset in this effort: many of our programs today exist due to the efforts of one or<br />
a few visionary people who had an innovative idea to help make our company “greener.”<br />
Our environmental program is built on three pillars: conserving resources, minimizing waste, and<br />
improving our products and packaging.<br />
“I had been traveling a bunch and started thinking about the environmental implications of<br />
all the jet fuel and ways to off-set my carbon footprint. I got to thinking that there might be<br />
others who felt the same. So I asked if we had a program to offset the footprint of employee<br />
travel.”<br />
- ISOBEL S., ASSOCIATE DESIGN DIRECTOR, WOMEN’S KNITS<br />
At Isobel’s suggestion, we implemented a Carbon Offset program in partnership with the Student Conservation<br />
Association. Associates can now make donations to purchase trees to offset business travel, and AEO, Inc. will<br />
match the donations. The trees are then planted in national parks and forests by SCA interns.<br />
NEXT Conserving Resources<br />
33
AE BETTER WORLD ENVIRONMENT CONSERVING RESOURCES<br />
Conserving Resources outside parking areas. This reduction in wattage and the use of motion sensors also<br />
We’ve introduced measures to reduce the use of energy, water, and other natural<br />
resources in many areas of our company.<br />
Pittsburgh Corporate Office Location<br />
In 2007, we made a landmark decision to move our corporate world headquarters<br />
to the South Side neighborhood of Pittsburgh, Pennsylvania. Once home to many<br />
steel mills, the city of Pittsburgh has undergone a dramatic transformation in<br />
recent years with the revitalization of former industrial sites. As a local company,<br />
we wanted to support this urban renaissance.<br />
Today, our corporate headquarters sits on a brownfield site on the banks of the<br />
Monongahela River. Once home to a steel mill, the site has been cleared of all<br />
lingering contaminants and is now a lush green landscape dotted with parks,<br />
restaurants, shops, and office buildings. We are proud to call it home.<br />
Energy Audit of Corporate Office<br />
In July 2010, we conducted an energy audit of our main corporate office in<br />
Pittsburgh. The audit assessed our performance on energy, water, and waste, as<br />
well as the use of environmentally-friendly materials and innovation in design.<br />
The audit highlighted several important areas in our operations, in particular,<br />
opportunities to improve energy efficiency. Improving office energy efficiency is<br />
now a key priority for 2012.<br />
Energy Reduction in Distribution Centers<br />
We have introduced several initiatives over the past few years to reduce energy<br />
consumption in our three distribution centers.<br />
Lighting Retrofits<br />
In July 2010, we began a lighting retrofit project at our largest distribution facility<br />
in Kansas. The project included updating lighting fixtures and adding lighting<br />
sensors. We replaced 911 1000-watt fixtures with 480-watt high efficiency<br />
fluorescent fixtures, and we swapped out another 114 480-watt fixtures with 354watt<br />
fixtures. We were also able to replace half of the 1000-watt fixtures located in<br />
reduced our air conditioning needs. Our projected energy savings from the Kansas<br />
lighting retrofit is 7,741,469 kilowatt hours per year - an annual reduction of 38%.<br />
We are planning to implement similar lighting retrofits at our other two<br />
distribution centers in the near future. In the meantime, bulbs that burn out in our<br />
other two facilities are replaced individually with higher efficiency fixtures. We<br />
have also installed motion sensor lighting in less-trafficked areas, such as offices,<br />
restrooms, and parts of the warehouse floors. When the buildings are empty, all<br />
lighting is manually shut off and HVAC settings are adjusted to reduce energy<br />
consumption.<br />
“White” Roofs and HVAC Units<br />
We have reduced our energy usage at our Kansas and Pennsylvania distribution<br />
centers by installing white roofs, which absorb less heat from the sun and lower<br />
cooling needs in the summer months. At our Kansas facility, the entire roof was<br />
replaced with a white surface. In Pennsylvania, one third of the roof was replaced<br />
during the summer of 2010 and we hope to replace another sizeable portion in the<br />
near future. In the Pennsylvania distribution center, we also replaced 12 HVAC<br />
rooftop units with high efficiency SEER-15 units. The energy reduction has been<br />
considerable: our new HVAC units on the white roof portions have run 30% more<br />
efficiently since installation.<br />
Energy Reduction In Stores<br />
In May 2010, we introduced a new lighting policy for store management. All store<br />
lighting panels are now color-coded, with each color representing the time of day<br />
at which certain lights should be turned on. Before stores are open to customers,<br />
minimal lights are used. More lights are gradually turned on throughout the day to<br />
accommodate store and customer needs.<br />
In June 2010, we also introduced a policy instructing our open-air lifestyle center<br />
stores to keep their doors closed year-round so that we don’t waste energy trying to<br />
heat or cool outdoor space.<br />
34
AE BETTER WORLD ENVIRONMENT CONSERVING RESOURCES<br />
Conserving Resources (continued)<br />
Our newest New York flagship store, which opened in November 2010 in<br />
Manhattan’s Soho neighborhood, is a leading example of energy efficient design.<br />
The Soho store was designed to utilize energy-efficient electronic displays. Multiple<br />
seven-foot tall displays are located throughout the three-story, 24,000 square-foot<br />
store. Three columns in the main entrance provide window displays and instore<br />
branding. Four additional columns, located at each escalator, help to guide<br />
customers throughout each level of the store. These innovative displays use up to<br />
75% less power than traditional backlit or projection technology-based products.<br />
This reduction in power usage decreases the amount of heat generated, which in<br />
turn reduced our need for air-conditioning.<br />
Water<br />
Water plays an important role in the manufacturing of textile products. Water is<br />
necessary to wash and dye garments to create the look and feel envisioned by our<br />
designers.<br />
Unfortunately, water usage in textile production has led to negative environmental<br />
impacts, including shortages of fresh water and contamination of water sources<br />
when appropriate wastewater precautions are not taken. The Pearl River Delta in<br />
Guangdong, a province on the southern coast of China, has been particularly hard<br />
hit. Numerous manufacturing facilities in this region have been cited as a major<br />
cause of contamination for that region’s water sources.<br />
In 2007, we joined Business for Social Responsibility (BSR)’s Sustainable Water<br />
Group (SWG) 50 to learn about ways to minimize the potential negative impact of<br />
our own products and explore industry-wide efforts to reduce the negative impact<br />
of manufacturing on global water sources. The SWG is a partnership of five global<br />
apparel companies committed to responsible wastewater practices in global textile<br />
supply chains.<br />
The SWG uses industry-developed Water Quality Guidelines 51 to help companies<br />
mitigate the potential harmful impacts and business risks from global operations.<br />
50 http://www.bsr.org/en/our-work/working-groups/sustainable-water-group<br />
51 http://www.bsr.org/reports/awqwg/BSR_AWQWG_Guidelines-Testing-Standards.pdf<br />
In 2007, we began monitoring water quality test reports submitted by supplier<br />
mills and laundries. After analyzing these reports, we realized that the data we<br />
were receiving was not comparable between facilities because different local<br />
governments test by different standards of sampling, water quality parameters,<br />
and other methodologies. As a result, we implemented a new process in 2010 to<br />
physically extract our own samples to ensure consistent, accurate test results using<br />
BSR standards for our top denim laundries. The results showed that all of the tested<br />
suppliers met their local standards for water quality, but seven out of ten fell short<br />
when it came to the more stringent SWG standards. These seven suppliers were<br />
sent corrective active plans and we are currently working with them to develop<br />
clear, achievable goals for improvement, which may include external advisory<br />
services, on-site consultations and re-testing.<br />
We know that many stakeholders share our desire to ensure that apparel laundries,<br />
mills, and other manufacturing facilities around the world discharge clean water<br />
back into the environment. In June 2011, we were contacted by Greenpeace, which<br />
had concerns about water discharge from Well Dyeing, a fabric mill in southern<br />
China. Although we no longer had any programs in development with Well<br />
Dyeing, we did respond to Greenpeace’s request to engage in their Detox Challenge<br />
campaign. A copy of our response is available here 52 .<br />
Carbon Emissions In Transportation<br />
We don’t own or operate the planes, cargo ships, and trucks that transport our<br />
products from factories around the world to our stores. But we have been working<br />
actively with our transportation partners to monitor and promote greater fuel<br />
efficiency.<br />
We have begun to reduce our usage of fuel-intensive transportation methods<br />
between US ports and distribution centers. In 2010, we converted approximately<br />
90% of our freight from truck to rail between the port of Long Beach, California<br />
- one of the key entry points into the United States for our merchandise - and<br />
our distribution center in Kansas. This initiative not only reduced our reliance<br />
52 http://www.ae.com/Images/corpResp/images/environment/Greenpeace_Letter_110812.pdf<br />
35
AE BETTER WORLD ENVIRONMENT CONSERVING RESOURCES<br />
Conserving Resources (continued)<br />
on expensive fuel associated with trucking, but also helped reduce our emissions<br />
between the port and our distribution center.<br />
We have also begun to track the carbon footprint of our transportation network,<br />
with an initial focus on ocean vessel and domestic truck transportation. We are<br />
still in the beginning stages of this process but hope to provide more data on<br />
carbon emissions in future reports.<br />
Promoting cleaner transportation<br />
We do not own or operate our own transportation fleet. However, meaningful<br />
reduction in the total carbon footprint of our supply chain is important to us.<br />
For years, we have expected our transportation suppliers to deliver quality and<br />
timely service. Now we are asking them where possible to take meaningful steps to<br />
reduce fuel usage and minimize their reliance on the most polluting forms of fuel.<br />
Many of our domestic transportation suppliers participate in the SmartWay<br />
Transport Partnership 53 , a collaboration between the U.S. Environmental<br />
Protection Agency (EPA) and the U.S. freight industry. SmartWay seeks to lower<br />
the environmental impacts of freight operations by providing incentives for<br />
carriers to improve fuel efficiency and reduce carbon emissions, greenhouse gases<br />
and air pollution. All of AEO, Inc.’s domestic truck-load (TL) and less-thantruckload<br />
(LTL) carriers, who move shipments from US ports to our distribution<br />
centers, are SmartWay-certified. In addition, 43% of our Delivery Agents, who<br />
move shipments from consolidation points to our stores, are certified, and another<br />
14% are currently working towards certification.<br />
Recently, we sent a letter 54 to our transportation partners asking them to share<br />
more information with regards to their practices to reduce fuel consumption<br />
and minimize reliance on the most carbon-intensive forms of fuel, including<br />
fuel derived from oil sands. We plan to formalize our request for transportation<br />
partners to prioritize cleaner fuel sources into our contractual process later this<br />
year.<br />
53 http://www.epa.gov/smartwaylogistics/index.htm<br />
54 http://www.ae.com/Images/corpResp/images/environment/usatruck_20110831.pdf<br />
Sustainable Practices in Cafes<br />
Our Pennsylvania corporate office locations and US distribution centers all boast<br />
cafes managed by Guckenheimer 55 , an external catering company. Guckenheimer<br />
is firmly committed to sustainability in restaurant services, emphasizing not only<br />
nutrition and healthy meal choices for our associates, but also utilizing energyconserving<br />
restaurant equipment and offering local and organic produce, organic,<br />
free-range, grass-fed and naturally raised poultry, pork, lamb, and hormone-free<br />
beef, cage-free shell eggs and hormone-free dairy products.<br />
NEXT Minimizing Waste<br />
55 http://www.guckenheimer.com/<br />
36
AE BETTER WORLD ENVIRONMENT MINIMIZING WASTE<br />
Minimizing Waste<br />
Recycling Initiatives<br />
We have comprehensive recycling programs in place at our corporate office and<br />
distribution centers in the U.S. and Canada.<br />
In our corporate offices, recycling bins are located in copy rooms, cafes, kitchens,<br />
and at each associate’s work space. We recycle plastics (including cups, containers<br />
and utensils), metal cans, glass bottles and jars, paper, and cardboard. Every year<br />
in August, we also hold a two-week-long “Clean and Green” event to encourage<br />
associates to dispose of confidential corporate documents that are no longer<br />
needed in an environmentally-friendly manner.<br />
We recycle an even wider array of products in our distribution centers according<br />
to the different materials utilized within these facilities. Commonly recycled items<br />
include cardboard (including empty shipping boxes), batteries, aluminum cans,<br />
toners, paper, and plastic bales and shrink wrap.<br />
While we are not yet able to quantify our recycling efforts in our New York and<br />
Kansas locations, our 2010 efforts in our Pennsylvania and Canada facilities<br />
yielded 183,951 tons of paper and 6,021 tons of cardboard bale recycling that would<br />
have otherwise gone to a landfill.<br />
Donation Of Damaged Goods<br />
When our goods are damaged during manufacturing or transportation, the last<br />
thing we want to do is send them to a landfill. We’ve put considerable effort into<br />
developing partnerships with organizations that can recycle or reuse damaged<br />
goods. In 2010, we donated:<br />
• 33,000 pairs of ripped jeans to Habitat for Humanity to be recycled into housing<br />
insulation. This was enough denim to insulate 66 new homes for victims of<br />
Hurricane Katrina.<br />
• 15,374 new, single shoes to the National Odd Shoe Exchange, a foundation<br />
which caters to people who need single shoes or pairs of different sizes due to<br />
amputation, club feet, leg braces, diabetes, or other disabilities.<br />
• 138,000 pieces of broken jewelry to Materials for the Arts (MFTA). MFTA<br />
provides free materials to charitable and educational organizations for use in arts<br />
programs.<br />
In addition, we collect non-denim ripped garments that we receive from customer<br />
returns and factories. Once we have an entire container load, we send these<br />
items to Leigh Fibers to be shredded and utilized in the manufacturing of car<br />
dashboards, carpet insulation, speaker stuffing, and similar products.<br />
For more information on our partner organizations, please visit the following sites:<br />
• Habitat for Humanity<br />
http://www.habitat.org<br />
• Leigh Fibers<br />
http://www.leighfibers.com<br />
• Materials for the Arts<br />
http://www.mfta.org<br />
• National Odd Shoe Exchange<br />
http://www.oddshoe.org<br />
Paper Reduction in Corporate Offices<br />
Although paper is a fixture in all corporate offices, we’ve been working to reduce<br />
our overall paper consumption.<br />
In 2010, we transitioned our internal newsletter, AE Life, from a printed<br />
publication to an electronic-based version. The magazine, which is approximately<br />
20 pages in length, is published three to four times a year. With our new online<br />
“e-zine,” we have reduced the number of printed copies by 98% from approximately<br />
135,000 copies to just 2000 copies per year. These remaining paper copies will<br />
be printed on paper certified by the Forest Stewardship Council (FSC) and will<br />
contain up to 35% post-consumer recycled material.<br />
37
AE BETTER WORLD ENVIRONMENT MINIMIZING WASTE<br />
Minimizing Waste (continued)<br />
We also recently introduced a “paperless payroll” option for associates. Associates<br />
also have the option to view pay statements online. Today, 96% of corporate<br />
associates, 94% of distribution center associates, and 52% of stores associates<br />
participate in the paperless payroll program. So far, it has proven to be convenient,<br />
cost-effective, and good for the environment.<br />
NEXT Product Innovation<br />
38
AE BETTER WORLD ENVIRONMENT PRODUCT INNOVATION<br />
Product Innovation<br />
Reduced Packaging<br />
In May 2009, we introduced new environmentally-friendly requirements for<br />
suppliers who pack and ship our merchandise. Our new policy requires suppliers to<br />
use single-wall corrugated shipping cartons, which replace the double- or triplewalled<br />
cartons previously used. In addition, we increased our packing density<br />
standards, requiring that more units be packed into each carton. As a result, our<br />
shipping carton density increased 5.1% in the 12 months after the policy change.<br />
Not only did this new policy improve container utilization, but it also reduced the<br />
total amount of packaging needed to transport our goods, reducing paper waste as<br />
well as carbon emissions and fuel usage in our supply chain.<br />
Shopping Bags, Gift Boxes & Shoe Boxes<br />
The vast majority of paper shopping bags used in our <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>,<br />
Aerie and 77kids stores are made from 100% post-consumer recycled material and<br />
are recyclable. In addition, most <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> and 77kids gift and<br />
shoe boxes are made from 100% post consumer recycled material. Our Aerie gift<br />
and shoe boxes currently contain about 30% recycled content.<br />
AEO Outlet stores use plastic shopping bags that contain 60% recycled material<br />
and are also recyclable.<br />
Use of Recycled Content in Paper Materials<br />
We avidly use email, text messages, and social media to stay connected to<br />
our customers. However, we have found that direct mail is still an important<br />
way to communicate with our customers, so we have taken steps to make this<br />
communication ‘greener.’ Currently, about 23% of the paper we use in our direct<br />
mail activities is made with some recycled content.<br />
Environmentally-Friendly Products<br />
We took our first step towards introducing environmentally-friendly products with<br />
the launch of an “Eco Shop” in our Holiday 2010 collection. Available exclusively<br />
online, the shop offered men and women’s apparel made from certified organic and<br />
recycled materials. Many styles were made from organic cotton, which is grown<br />
without the use of harmful synthetic pesticides and results in fewer fossil fuel<br />
emissions than conventional cotton. Other styles were made from recycled content,<br />
which gives new life to materials that would have otherwise ended up in landfills.<br />
Policies Against Animal Cruelty<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. strictly prohibits the use of real animal fur and<br />
Australian mulesed wool in all of our products. We are also against the use of<br />
animal testing on our products.<br />
NEXT Environment Goals<br />
PAPER COMPOSITION POUNDS<br />
30% Recycled Content & Made With Wind Power 265, 278<br />
30% Recycled Content 77,936<br />
10% Recycled Content 433,907<br />
100% Recycled Content & Made With Wind Power 1,422<br />
Direct Mail Printed Materials - Recycled Content Breakdown<br />
TOTAL 778,543<br />
39
AE BETTER WORLD ENVIRONMENT ENVIRONMENT GOALS<br />
Environment Goals<br />
2011-12 Environment Goals<br />
• Improve corporate office energy efficiency based on results of July 2010 energy<br />
audit.<br />
• Measure and expand reporting on recycling efforts in company-owned facilities.<br />
• Conduct company-wide carbon footprint to identify key opportunities for<br />
emission reduction.<br />
• Formalize internal structure to manage Environmental Affairs across<br />
the company. Establish a strong organizational structure, as well as clear<br />
responsibility and accountability for the program.<br />
NEXT Associates<br />
40
AE BETTER WORLD ASSOCIATES<br />
Associates<br />
Be individual. Think broadly. Be real.<br />
Be distinct.<br />
These principles are the inspiration behind Live Your Life, Love Your Job - the theme<br />
that runs through our company, our brand, our culture. We strive to be an employer of<br />
choice - a place where people are excited to come to work because they believe in what<br />
we do, enjoy working with each other, and have fun doing it.<br />
“AEO has a unique culture of accommodating people. In my job, I interact<br />
with everyone from Jim O’Donnell to our cleaning crew. People here have<br />
an ability to cross lines and departments and help out with just about any<br />
project or problem. You never hear people say, “that’s not my job.’ They<br />
usually say, “let me look into it” - and then they go do it without fanfare.<br />
I like the fact that doors are always open and you can talk or ask a favor<br />
of most anyone in the company. In many companies, people don’t interact<br />
with other departments, but here it’s the norm. Everyone knows at least a<br />
few people in each department and almost everyone is friendly and willing<br />
to talk!”<br />
- HERB C., FACILITIES<br />
NEXT Our Values<br />
41
AE BETTER WORLD ASSOCIATES OUR VALUES<br />
Our Values<br />
We believe the best way to live our lives and love our jobs is to live our values.<br />
Our five core company values are:<br />
• People<br />
• Integrity<br />
• Passion<br />
• Innovation<br />
• Teamwork<br />
These values capture our company spirit and drive our organizational vision and<br />
goals. They are prominent in our Associate Performance Evaluations and serve as<br />
key criteria for our recognition programs.<br />
Our Live Your Life Love Your Job campaign is an extension of these values. It<br />
inspires our work. It drives us to treat our fellow associates with respect. It is the<br />
frame of mind that guides our brand and our culture.<br />
“When AEO was getting ready to launch our children’s clothing line,<br />
the company needed to add an extra product safety layer to many<br />
people’s roles and responsibilities. Universally, throughout the<br />
company, these new roles were embraced without objection. It was<br />
clear that, in order to provide the safest possible product to our<br />
customers, this was something we had to do and do well...and it was<br />
done. To me, this reflects the integrity of the people working for the<br />
company.”<br />
- REBECCA G., LEGAL<br />
NEXT Compensation & Benefits<br />
42
AE BETTER WORLD ASSOCIATES COMPENSATION & BENEFITS<br />
Compensation & Benefits<br />
Compensation & Benefits<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. strives to maintain a competitive compensation<br />
and benefits structure.<br />
We view compensation as a combination of base salary and short- and long-term<br />
incentives. We work to pay our associates fairly based upon market research, data,<br />
and statistics. All associates have the opportunity to earn some form of incentive<br />
pay. We encourage our associates to save for retirement through our matching<br />
401(k) program. Associates also have the option to participate in our Employee<br />
Stock Purchase Plan (ESPP). We will match 15% of each Associate’s bi-weekly<br />
contribution to the ESPP up to $100 per pay period.<br />
We offer an array of benefits to promote the health and wellness of our associates.<br />
Full-time and part-time associates are eligible for comprehensive medical, dental<br />
and vision coverage. To encourage everyone to live a healthier lifestyle, we<br />
maintain state-of-the-art fitness centers at our Corporate Office in Pittsburgh<br />
and in our Kansas and Canadian distribution centers. Corporate and distribution<br />
center associates who are not based in these locations are eligible to receive a gym<br />
reimbursement benefit.<br />
We recognize the importance of balancing work and family life. In addition to<br />
a generous Paid Time Off (PTO) plan, we offer a number of work/life programs,<br />
including paid maternity leave, new dependent leave options, adoption assistance,<br />
tuition reimbursement, and back up child care assistance.<br />
We also have a long-standing tradition of Early Out Fridays every summer to help<br />
our associates spend more quality time with their families. Between Memorial<br />
Day and Labor Day, all corporate associates may leave between 12 and 2 p.m.<br />
Distribution Center associates enjoy Early Outs during non-peak periods of time.<br />
Store district managers and above are eligible for two Free Fridays throughout the<br />
summer.<br />
Finally, at <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc., every day is “casual Friday.” We<br />
encourage everyone to be themselves, to wear the brand, and to be creative in their<br />
work and work attire. Our office environments provide collaborative work spaces<br />
to encourage cross-functional teams to gather informally in comfortable, casual<br />
settings. Oversized sofas, chairs, picnic tables and benches adorn the open areas in<br />
our Pittsburgh and New York offices to help promote teamwork and camaraderie.<br />
Hardships<br />
We strive to take care of our associates when they face major hardships. Over the<br />
years, we have provided clothing, gift cards, food, lawn service, and maid service<br />
to associates that have experienced tragedies in their lives. We also encourage<br />
associates to work from home when they need to be with a family member.<br />
NEXT Communication & Retention<br />
43
AE BETTER WORLD ASSOCIATES COMMUNICATION & RETENTION<br />
Communication & Retention<br />
We strive to be an open environment - open to listening, open to new ideas.<br />
At our Corporate Office, New York Design Center, and Distribution Centers in<br />
Pennsylvania, Kansas, and Canada, our CEO and senior leaders hold regular<br />
roundtable discussions with randomly selected groups of associates. These sessions<br />
provide an open forum in an intimate setting for associates to ask questions and<br />
speak directly with senior leadership.<br />
We encourage an open-door culture based on two-way dialogue and feedback, and<br />
we strive to foster open discussion and questions between associates and managers.<br />
We support the right of free association for all associates, and a trade union<br />
represents associates in our Canadian distribution center.<br />
“I am a long time AE associate. Long story short, I filled out a survey<br />
and got called into a meeting with Jim [O’Donnell]. I didn’t even know<br />
what a “round table” meeting was about, but I learned quickly that<br />
it had to do with my feedback on the survey. I was anxious and he<br />
seemed angry, but this meeting ended up being one of my proudest<br />
AE moments. The fact that our CEO took time out of his busy schedule<br />
to hear my feedback and that he genuinely cared about my input was<br />
fantastic. The AE culture has taught me so much about collaboration,<br />
believing in yourself, and embracing new ideas. And by the way, I<br />
received a personal follow up e-mail from Jim.”<br />
- CINDY D., FINANCE<br />
Key highlights of our communication channels include:<br />
• Regular CEO-led meetings for all office and distribution center associates to hear<br />
from senior leadership and ask questions about the company’s past, present, and<br />
future.<br />
• AE Life, our intranet and quarterly e-magazine.<br />
• Monthly Distribution Center Chats.<br />
• Daily Start-Up Meetings held in the Distribution Centers by each department<br />
supervisor to discuss shift goals, safety information and campus events.<br />
• Three Regional Store Management Meetings per year, which are followed by Take<br />
It Back meetings between store managers and store associates.<br />
• Customer First, which defines our approach to communication throughout the<br />
company and strives to ensure that every customer leaves our stores happier than<br />
when they walked in. Customer First reminds us that - like every associate - each<br />
AEO, Inc. customer is an individual with unique needs, and that we should be<br />
real and ready for every person who walks through the door.<br />
• Communication Center for store associates, which provides personalized selling<br />
goals, promotional news and new product knowledge to ensure associates are<br />
adequately equipped to meet each customer’s unique needs.<br />
• AEOTV, a beloved cornerstone of Communication Center, which provides upto-the-minute,<br />
short training videos featuring product knowledge and selling<br />
tips directly from our design team. AEOTV segments are shot in a “behindthe-scenes”<br />
environment which helps store associates understand our design<br />
inspiration and the hottest fashion trends.<br />
• Our confidential Speak Up Program for corporate associates to speak with the<br />
Human Resources team, and an Alert Line which is managed by an independent<br />
third-party and anonymously connects store associates with Human Resources.<br />
• The confidential AE Hotline 56 , which provides a toll-free phone number and<br />
secure website managed by an independent third-party for associates to voice<br />
serious concerns.<br />
NEXT Diversity<br />
56 http://www.aehotline.com/<br />
44
AE BETTER WORLD ASSOCIATES DIVERSITY<br />
Diversity<br />
We are an equal opportunity employer and strive to treat our associates with<br />
respect and dignity. Our diverse workforce provides our business with many<br />
benefits, including enhanced creativity, different approaches to problem solving,<br />
and the ability to work effectively in our diverse markets.<br />
Workplace Culture Policy<br />
We are committed to selecting, developing, and rewarding the best person for<br />
the job, based on the requirements of the work to be performed, and without<br />
regard to race, color, national origin, religion, disability, marital status, age, sexual<br />
orientation, genetic information, gender, gender identity and expression, or any<br />
other basis protected by federal, state, or local law. We forbid discrimination of all<br />
kinds, whether directed at associates, applicants, suppliers, vendors, customers, or<br />
visitors. This policy applies to all terms and conditions of employment, including<br />
recruitment, hiring, promotion, compensation, benefits, training, discipline and<br />
termination.<br />
We believe the work environment should foster respect for one another and<br />
provide a setting for one to work hard, learn, and grow. We do not tolerate<br />
harassment or workplace behavior - whether committed by a fellow associate,<br />
leader, contractor, customer, or supplier - that intimidates, offends, degrades, or<br />
humiliates another person. This prohibition applies whether the harassment is<br />
based on one’s protected status or not.<br />
Workplace Culture Training<br />
Our commitment and values are reflected in our Code of Ethics 57 and our<br />
Workplace Culture Policy 58 . These policies are provided to every new hire and<br />
discussed in orientation. We educate every associate on these policies through a<br />
combination of computer-based and live Workplace Culture Training. Associates<br />
are then required to participate in refresher courses to ensure that they continue to<br />
understand and live by these values in our workplace.<br />
57 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=<br />
&t=1<br />
58 http://www.liveyourlifeloveyourjob.com/document/Workplace_Culture_Policy.pdf<br />
Reporting Concerns<br />
Associates have multiple channels - including the confidential AE Hotline 59 -<br />
through which they can report potential violations of our Code of Ethics 60 and our<br />
Workplace Culture Policy 61 . We take every report seriously and investigate each<br />
claim. If we find that a violation has occurred, we take prompt and effective action<br />
to ensure that the behavior does not occur again. We do not tolerate retaliation<br />
against associates for reporting potential violations - period.<br />
INROADS Partnership<br />
In 2007, we established a new and exciting partnership with INROADS. INROADS<br />
Interns are the best and brightest ethnically diverse high school and undergraduate<br />
students in North America. These outstanding students typically rank in the top<br />
10% of their senior class and aspire to professional and leadership careers. The<br />
INROADS Retail Management Institute (RMI) is designed to develop outstanding<br />
ethnically diverse students for executive careers in retail. To date, our INROADS<br />
interns have worked in Management, Marketing and Store Operations. We are<br />
optimistic about the future of this promising partnership.<br />
Looking Ahead<br />
We recognize that we still have work to do to improve the gender and ethnic<br />
diversity of our company. Nevertheless, we have made progress. Since 2006, the<br />
total percentage of non-Caucasian minorities in our company increased from 19%<br />
to 29%. Women holding Executive roles (Vice President and above) increased from<br />
25% in 2006 to 37% in 2011.<br />
For more detail on our diversity statistics, please click here 62 .<br />
59 http://www.aehotline.com/<br />
60 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=<br />
&t=1<br />
61 http://www.liveyourlifeloveyourjob.com/document/Workplace_Culture_Policy.pdf<br />
62 Page 46<br />
45
AE BETTER WORLD ASSOCIATES DIVERSITY DIVERSITY STATISTICS<br />
Diversity (continued)<br />
Diversity Statistics<br />
GENDER<br />
DIVERSITY<br />
AS OF MARCH 2011<br />
FEMALE<br />
MALE<br />
34%<br />
28%<br />
66%<br />
72%<br />
29%<br />
71%<br />
63%<br />
47%<br />
37%<br />
53%<br />
ETHNIC<br />
DIVERSITY<br />
AS OF MARCH 2011<br />
MULTIPLE ETHNICITIES<br />
NATIVE AMERICAN<br />
NEXT Hiring & Training<br />
ASIAN<br />
AFRICAN AMERICAN<br />
PACIFIC ISLANDER<br />
LATINO<br />
CAUCASIAN<br />
2.49% 0.55% 3.41%<br />
70.69%<br />
COMPANY TOTAL COMPANY TOTAL<br />
8.57%<br />
13.65%<br />
CORPORATE EXECUTIVE CORPORATE<br />
EXECUTIVE<br />
FIELD<br />
DISTRIBUTION CENTER<br />
0.08% 2.03%<br />
2%<br />
0.51% 6.67%<br />
2%<br />
0.08%<br />
87.09%<br />
FIELD<br />
14.38%<br />
3.54%<br />
0.56%<br />
2.63% 3.37%<br />
9.04%<br />
0.68%<br />
69.34%<br />
96%<br />
0.64%<br />
0.79% 1.57%<br />
0.34% 0.79%<br />
0.11%<br />
2.58%<br />
93.82%<br />
DISTRIBUTION CENTER<br />
46
AE BETTER WORLD ASSOCIATES HIRING & TRAINING<br />
Hiring & Training<br />
We seek to attract talented people who want to grow and be part of a great team.<br />
Our recruiting philosophy is built on our company’s vision and values. We look<br />
for people who are friendly, respectful of others, open-minded, team-oriented,<br />
innovative, flexible, action-oriented, and passionate about what they do. Our<br />
recruiting website Live Your Life Love Your Job 63 offers a view into our culture and<br />
hiring process.<br />
Associate Orientation<br />
We get one chance to get each associate’s new orientation right. Associates in the<br />
Corporate Office, New York Design Center, Distribution Centers and Field are<br />
welcomed through our AEO New Orientation program. AEO New Orientation<br />
guides the new associate through their first full year, with a special focus on the<br />
first 90 days.<br />
Ongoing Development<br />
We maintain a variety of learning and development avenues to meet the diverse<br />
training needs of our people.<br />
The Associate Experience provides an interactive course curriculum for store<br />
associates on defined success factors and core values. The curriculum begins<br />
with an industry-leading, interactive onboarding program about our brand and<br />
products led by a designated store trainer. Store associates are then introduced to<br />
Customer First, which defines AEO, Inc.’s approach to communication and strives<br />
to ensure that every customer leaves our stores happier than when they walked<br />
in. Finally, store associates continue their development through Communication<br />
Center, which provides personalized selling goals, promotional news and new<br />
product knowledge, and AEOTV, which provides up-to-the-minute, short training<br />
videos featuring product knowledge and selling tips directly from our design team.<br />
Achieving Excellence is our 16-week entry level training program for<br />
merchandising and planning & allocation. Every year, we recruit approximately<br />
30 college students from major universities across the country and associates from<br />
63 http://www.liveyourlifeloveyourjob.com/<br />
our stores. Achieving Excellence provides a combination of classroom training,<br />
field experience, interoffice exposure and on-the-job training. Upon successful<br />
completion, associates are placed into areas that best suit their skill sets.<br />
The AEO Internship Program 64 is an important way that we discover and recruit<br />
future company leaders. The program is designed for college students who have<br />
finished their junior year of study. AEO, Inc. internships offer talented individuals<br />
the opportunity to experience a fast paced retail environment with the potential<br />
of a full-time offer after graduation. Internships are available in a variety of<br />
divisions, including Merchandising and Planning & Allocation. Furnished<br />
housing, including rent and utilities, is provided for students that do not live in the<br />
Pittsburgh area.<br />
In 2007, the New York Design Center also launched our Design Assistant Trainee<br />
Program, offering full-time permanent placement for fashion design graduates.<br />
This program helps us to hire top talent and build bench strength for future<br />
growth.<br />
Finally, our Mentoring Program pairs senior executives (Mentors) with high<br />
performing associates (Proteges) in a nine month one-on-one mentoring<br />
relationship to foster stronger partnerships between current and future leaders of<br />
the business. Promotion rates of Proteges over the past four years have exceeded<br />
80%.<br />
Recognition<br />
Our company is successful when our people are successful. In 2010, we celebrated<br />
our associates’ achievements at all levels, ranging from awards to sales associates<br />
for building customer connections and driving sales performance to excellence<br />
awards for distribution center associates to our <strong>Eagle</strong> of the Year, our top annual<br />
award which recognizes an associate who has made an outstanding contribution to<br />
the company.<br />
64 http://www.liveyourlifeloveyourjob.com/college_internships.aspx<br />
47
AE BETTER WORLD ASSOCIATES HIRING & TRAINING<br />
Hiring & Training (continued)<br />
In 2010-11, our <strong>Eagle</strong> of the Year was Stan D., Senior Maintenance and Facilities<br />
Manager at our Kansas Distribution Center. Stan spearheaded an energy- efficient<br />
lighting and HVAC overhaul project at the distribution center, which resulted in<br />
significant environmental and financial savings.<br />
“The lighting retrofit for the Kansas DC was a conscious effort to<br />
conserve energy and reduce the carbon footprint of the DC. Just<br />
a few short years ago, to get adequate lighting in the DC, we had<br />
to add an additional fixture for every existing two, which increased<br />
the cost immensely. With new technology, we were able to swap<br />
fixture for fixture. That alone justified the project with a two year<br />
return on investment (ROI). But adding strategically-placed automatic<br />
lighting brought an expected one year ROI and it now looks like our<br />
investment will be recovered in nine to ten months. To be successful<br />
in today’s business atmosphere you have to make smart decisions. I’m<br />
thankful that <strong>American</strong> <strong>Eagle</strong> looked at this project as a win for the<br />
environment, as well as a cost-savings opportunity”<br />
- STAN D., FACILITIES<br />
Every quarter, we also recognize associates who have gone “above and beyond” in<br />
their jobs as <strong>Eagle</strong>’s Elite. A panel of Vice Presidents and above selects recipients<br />
who demonstrate excellence and have gone beyond the scope of normal job<br />
responsibilities. Winning individuals and teams come from many different<br />
divisions of the company.<br />
We also encourage associates to recognize each other in real time through our<br />
High Five program. Winners receive a choice of gift cards and a High Five<br />
certificate to display in their work areas. In early 2011, we also began profiling<br />
High Five winners on our company-wide intranet. In FY2010 and through the<br />
first quarter of 2011, associates in our corporate offices and distribution centers<br />
recognized fellow teammates with more than 660 High Five awards.<br />
Sports and Events Tickets<br />
With Pittsburgh, PA, New York, NY, Kansas, and Canadian-based based corporate<br />
office and distribution center locations, we are a sports-minded culture. We<br />
offer many opportunities for corporate and distribution center associates to take<br />
advantage of company-sponsored tickets to sporting events.<br />
Every year, associates have opportunities to attend a variety of events, including<br />
the Pittsburgh Steelers and University of Pittsburgh Panthers at Heinz Field, the<br />
Pittsburgh Penguins at Consol Energy Center, the Pittsburgh Pirates at PNC Park,<br />
the New York Yankees at Yankee Stadium and the New York Mets at Citi Field, the<br />
Kansas City Chiefs at Arrowhead Stadium and Kansas City Royals at Kauffman<br />
Stadium, and University of Kansas football and basketball.<br />
Pittsburgh-based associates may also attend concerts at Stage AE®, where some of<br />
the coolest new bands perform.<br />
In early 2011, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. was also the presenting sponsor of<br />
the Big East basketball tournament, which provided our New York-based associates<br />
with the opportunity to attend some of the season’s most sought-after college<br />
basketball games.<br />
NEXT 2010 Business Challenges<br />
48
AE BETTER WORLD ASSOCIATES 2010 BUSINESS CHALLENGES<br />
2010 Business Challenges<br />
The retail business has gone through an enormous change over the past few years.<br />
In 2008, the economy suffered major upheaval. While recovery has begun, the<br />
challenging times are not yet over. The result of this turmoil has brought about a<br />
dramatic change in the consumer mindset toward shopping and value. Our 15- to<br />
25-year-old customer has been particularly affected.<br />
While 2009 and 2010 were difficult in many ways, we also learned valuable<br />
lessons that might not have been so clear in better times. For example, we have a<br />
deeper understanding of our customers, their perception of our brand, and their<br />
expectations in terms of fashion and value pricing. Additionally, we’ve made<br />
pivotal changes in our leadership teams, especially in merchandising and design.<br />
In 2010, we launched a company-wide initiative designed to resurrect the<br />
fundamental principles that brought about past success and create new success<br />
and growth through innovation. The goal is to work together to simplify and<br />
streamline our organization and maintain a laser-like focus on the elements that<br />
drive our business forward. We invited every associate to submit his or her ideas<br />
about ways the company can become more efficient and effective. As of summer<br />
2011, we had received more than 250 ideas from nearly 200 associates representing<br />
every office, distribution center location and store region - and ideas continue to<br />
pour in. Every idea is responded to, evaluated and tracked to completion - and<br />
many have already been implemented.<br />
Unfortunately, this project did include some reductions in staff in 2010. However,<br />
in each area, we have worked hard to minimize the number of people affected and<br />
treat those who left the company as fairly as possible.<br />
We believe that, at the end of these business challenges, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>,<br />
Inc. will emerge an even better company, with an even brighter future. That future<br />
will create more career and growth opportunities for everyone involved.<br />
NEXT Associate Goals<br />
49
AE BETTER WORLD ASSOCIATES ASSOCIATE GOALS<br />
Associate Goals<br />
2011-12 Associate Goals<br />
• Strengthen focus on associate development, including pilot of new performance<br />
management system that places greater emphasis on career development.<br />
• Increase focus on leadership training for senior managers.<br />
• Simplify work-life experience; identify additional opportunities to provide the<br />
“gift of time.”<br />
• Implement Customer First initiative and continue implementing opportunities<br />
identified through Back to the Future strategy.<br />
NEXT Community<br />
50
AE BETTER WORLD COMMUNITY<br />
Community<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is committed<br />
to investing in and giving back to the<br />
communities that contribute to our success.<br />
In 1999, we established the <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> Foundation to maximize the<br />
impact of our efforts and formalize our commitment. Through the AEO Foundation,<br />
we strive to create positive change in areas that are important to both our customers<br />
and associates, including youth development and environmental conservation. Our<br />
giving takes many forms, ranging from national charity partnerships to customer<br />
engagement initiatives to major community initiatives, international giving and<br />
associate activities.<br />
In 2010, charitable giving for the company and the AEO Foundation surpassed $3<br />
million. For more information on how your organization can request a gift card<br />
donation or a grant from the AEO Foundation, click here 65 .<br />
NEXT National Charity Partnerships<br />
65 http://www.ae.com/Images/corpResp/images/community/gift_cards_and_financial_grants.pdf<br />
51
AE BETTER WORLD COMMUNITY NATIONAL CHARITY PARTNERSHIPS<br />
National Charity Partnerships<br />
One of the key ways we strive to bring about positive social change is through<br />
strong, long-standing partnerships with charities that make a difference.<br />
Jumpstart<br />
Since 1997, AEO, Inc. and the AEO Foundation have supported Jumpstart 66 , a<br />
national early education organization headquartered in Boston that works toward<br />
the day every child in America enters school prepared to succeed. Through<br />
extraordinary attention in yearlong relationships, Jumpstart inspires children<br />
to learn, adults to teach, families to get involved, and communities to progress<br />
together. Each year, Jumpstart pairs over 3,500 trained college students in one-tothree<br />
ratios with preschool children in need of assistance. Since 1993, Jumpstart<br />
has trained more than 20,000 college students and community volunteers to<br />
deliver its program to more than 90,000 preschool children nationwide.<br />
When we joined forces with Jumpstart, we became its first national sponsor. We<br />
were also the founding sponsor of Jumpstart Pittsburgh and Jumpstart’s official<br />
clothing provider, supplying the organization’s college student mentors - known<br />
as Corps members - with their Jumpstart uniform of hats, t-shirts, and hoodies.<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. also provided t-shirts for children enrolled in the<br />
program.<br />
Since then, we have developed several campaigns to celebrate Jumpstart Corps<br />
members, including the annual AE Spirit of Service Awards, which pay tribute to<br />
outstanding leadership and recognizes select students with a college scholarship.<br />
By showcasing young people who make a difference in their community, we honor<br />
Corps members, inform our customers about Jumpstart, and inspire young people<br />
to be active and responsible citizens.<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is also a founding national sponsor of Jumpstart’s<br />
Read for the Record, a campaign to raise awareness about the importance of early<br />
education - and also set a world record for the largest shared reading experience<br />
ever. During the fifth annual campaign in 2010, our associates participated along<br />
66 http://www.jstart.org/<br />
with thousands of others across the U.S. and Canada to read to more than 2<br />
million children.<br />
Student Conservation Association<br />
The Student Conservation Association (SCA) 67 is a national conservation force<br />
of high school and college students who protect America’s natural resources<br />
and restore our environment. SCA members serve every day, in every state, as<br />
environmental stewards, rangers, researchers, educators and in other critically<br />
needed capacities. Rendering two million hours of service annually, SCA<br />
volunteers make substantial contributions to the improvement and preservation of<br />
America’s public lands while developing a powerful ethic of conservation service.<br />
Since 1957, SCA’s hands-on programs have helped to build new generations of<br />
conservation leaders, inspire a lifetime of stewardship, and help save the planet.<br />
AEO is currently the presenting sponsor of SCA’s Alternative Spring Break<br />
program. This distinctive program sends dozens of college students from across the<br />
United States to national parks, such as the Grand Canyon, to complete two weeks<br />
of conservation service.<br />
AEO is also the major sponsor of SCA’s recruiting activities on approximately<br />
300 college campuses and high schools nationwide. As part of our 2010 holiday<br />
marketing theme, “Reclaim the Outdoors,” we partnered with SCA to underwrite<br />
five unique environmental preservation projects in Pittsburgh, Washington, D.C.,<br />
Houston, Seattle and Detroit.<br />
Big Brothers Big Sisters<br />
Big Brothers Big Sisters (BBBS) 68 is justly renowned for success in youth<br />
mentoring. BBBS’s mission is to help children reach their potential through<br />
professionally supported one-to-one relationships with measurable impact. The<br />
organization serves 5,000 communities across America with a quarter of a million<br />
active matches. In Canada, BBBS works in 1,000 communities supporting more<br />
67 http://www.thesca.org/<br />
68 http://www.bbbs.org/<br />
52
AE BETTER WORLD COMMUNITY NATIONAL CHARITY PARTNERSHIPS<br />
National Charity Partnerships (continued)<br />
than 30,500 matches. BBBS also works with major companies who understand the<br />
value of successful mentoring. In 2006, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. launched<br />
a partnership with BBBS through a signature fund raising event, Bowl For Kids’<br />
Sake. In 2010, associates from our stores, distribution centers and Corporate<br />
Office all took part in Bowl For Kids’ Sake events, and the AEO Foundation<br />
donated $150,000 to help BBBS achieve sustainable growth to serve more children<br />
throughout the U.S. and Canada.<br />
Many associates in our Corporate Office, New York Design Center and<br />
Distribution Centers participate in BBBS’s workplace mentoring programs. Our<br />
volunteers are actively engaged with their Littles and speak enthusiastically about<br />
their experiences, both with the BBBS program and with the Littles themselves.<br />
NEXT Customer Engagement<br />
53
AE BETTER WORLD COMMUNITY CUSTOMER ENGAGEMENT<br />
Customer Engagement<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is proud to create innovative opportunities for<br />
our customers to support their local communities, and help people in need when<br />
disaster strikes around the world.<br />
Earth Day<br />
To help commemorate the 40th anniversary of Earth Day in the U.S., we invited<br />
our customers to donate to the Student Conservation Association’s 69 programs that<br />
empower young people to conserve the environment. <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong><br />
matched all customer contributions and made an additional donation to SCA in<br />
honor of the AEO store that raised the most funds. Additionally, we partnered with<br />
SCA on an Earth Day sweepstakes, featuring a shopping spree at <strong>American</strong> <strong>Eagle</strong><br />
<strong>Outfitters</strong> and other prizes.<br />
77kids also took part in Earth Day by partnering with Plant-It 2020 70 . For every<br />
sales transaction that took place on Earth Day, 77kids donated $1 to Plant-It 2020<br />
to plant a tree. In all, 1,287 trees were planted.<br />
Breast Cancer Awareness Month<br />
In support of Breast Cancer Awareness month, Aerie donated $1 for every bra sold<br />
to Bright Pink 71 , ultimately raising $50,000. Bright Pink is a national non-profit<br />
organization that provides education and support to young women who are at<br />
high risk for breast and ovarian cancer. They arm young women with knowledge,<br />
options and a positive attitude, and offer companionship and empathy during their<br />
journey. Bright Pink empowers women to take control of their breast and ovarian<br />
health, and in turn, realize the freedom and peace of mind to live a beautiful and<br />
fulfilling life.<br />
AEO Friends And Family<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> added a charity component to our annual Friends and<br />
Family festivities in 2010. Customers were invited to donate a dollar to Big Brothers<br />
69 http://www.thesca.org/<br />
70 http://www.plantit2020.org/<br />
71 http://www.bebrightpink.org/<br />
Big Sisters of America 72 and Big Brothers Big Sisters of Canada 73 - one of our key<br />
charity partners. All customer donations were matched by the company.<br />
WISH 4 SNOW<br />
77kids hosted a holiday program in 2010 called WISH4SNOW to benefit eight<br />
children’s hospitals across the country. 77kids customers were invited to make a<br />
77-cent donation to children’s hospitals with each in-store purchase. Customers<br />
who donated were rewarded with a 77kids “Ya Done Good, Kid” badge sticker and<br />
bumper sticker. Additionally, customers visited www.77kids.com to make “virtual<br />
snowflakes” stating their holiday wish. Once 100,000 snowflakes were designed,<br />
77kids by american eagle donated an additional $25,000 which was split evenly<br />
among the eight hospitals.<br />
Villanova T-Shirts<br />
<strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> hosts activities on a variety of college campuses.<br />
In 2010, we donated T-shirts to Villanova University’s 74 “The Saint Thomas of<br />
Villanova Volunteer Day.” On that day, 6,000 students, faculty, administration and<br />
alumni banded together and committed to perform a full day of volunteer service<br />
in the Philadelphia community.<br />
NEXT Major Community Initiatives<br />
72 http://www.bbbs.org/<br />
73 http://www.bbbsc.ca/<br />
74 http://www.villanova.edu/<br />
54
AE BETTER WORLD COMMUNITY MAJOR COMMUNITY INITIATIVES<br />
Major Community Initiatives<br />
AEO, Inc. makes large contributions to causes in the communities in which we<br />
live, work and play.<br />
AEO Foundation Grants<br />
In 2010, the AEO Foundation made 40 grants totaling $126,500 to non-profit<br />
organizations in Pittsburgh, New York City, Kansas, and in Canada. The grants<br />
supported a variety of youth development and student-related environmental<br />
conservation programs.<br />
In Pittsburgh, one grant was awarded to Womansplace and The Consortium<br />
for Public Education to expand their Expect Respect teen dating violence<br />
prevention program in area high schools. In New York City, we supported New<br />
York Cares’ Youth Service Environmental Program which teaches students about<br />
environmental conservation efforts and practices. In Canada, a grant to MADD<br />
enabled the organization to present its Assembly Program, “Shattered,” to high<br />
school students to raise awareness about the dangers of driving under the influence<br />
of alcohol or drugs. In Kansas, a grant to Headquarters Counseling Center, the<br />
leading suicide prevention organization in the state, helped upgrade its current<br />
crisis hotline system and allow more people to reach the calling center.<br />
Pittsburgh Promise<br />
In our Corporate Office community in Pittsburgh, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong><br />
hosted an essay contest for graduating high school seniors and made a $100,000<br />
donation to The Pittsburgh Promise 75 . The Pittsburgh Promise is a transformative<br />
program designed to help students in Pittsburgh Public Schools plan, prepare, and<br />
pay for education at an accredited post-secondary institution within the state of<br />
Pennsylvania.<br />
We invited eligible students to describe their personal vision for the city of<br />
Pittsburgh, and what they would do to help realize that vision. The winners were<br />
selected by a panel of <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> associates, based on vision,<br />
commitment to action, creativity, plausibility, grammar, spelling, and punctuation.<br />
75 http://www.pittsburghpromise.org/<br />
The panel selected 23 winners from high schools in the Pittsburgh Public Schools<br />
system as well as Pittsburgh charter high schools.<br />
The winners received a new laptop computer, and a gift card from <strong>American</strong> <strong>Eagle</strong><br />
<strong>Outfitters</strong> for a new back-to-school wardrobe. They were also treated to lunch at<br />
our corporate headquarters hosted by our CEO, Jim O’Donnell.<br />
Riverlife<br />
Since 2000, Riverlife 76 has been connecting the people of Pittsburgh with one of<br />
the city’s most valuable natural resources - its rivers. In 2010, we made a $50,000<br />
contribution to Riverlife to help complete the South Shore Riverfront Park, a<br />
28-acre facility on the banks of the Monongahela River. The park is adjacent to<br />
our corporate campus and will provide the residents of Pittsburgh with another<br />
wonderful outdoor space.<br />
Ottawa Community Partnership<br />
In November 2010, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. made a $100,000 donation to<br />
the Ottawa Community Partnership in Kansas, the home of one of our distribution<br />
centers, to help build a YMCA. Ottawa is a small town with a population of 12,887.<br />
Our contribution will help to build the community’s first community wellness,<br />
recreation and gathering center. In addition, the YMCA will provide programming<br />
to make the region’s young people better students and citizens, foster healthy<br />
diversity and provide wellness opportunities for all ages.<br />
NEXT International Initiatives<br />
76 http://www.riverlifepgh.org/<br />
55
AE BETTER WORLD COMMUNITY INTERNATIONAL INITIATIVES<br />
International Initiatives<br />
World Vision<br />
In 2010, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. donated more than 107,000 T-shirts,<br />
shorts, pants, skirts, shoes and personal care items were donated to World<br />
Vision 77 , a humanitarian organization dedicated to tackling the causes of poverty<br />
and injustice by working with children, families, and their communities. World<br />
Vision serves close to 100 million people in nearly 100 countries around the world<br />
regardless of religion, race, ethnicity, or gender.<br />
Haiti & “Hear To Help” CD<br />
When the devastating earthquake rocked Haiti at the beginning of 2010, <strong>American</strong><br />
<strong>Eagle</strong> <strong>Outfitters</strong> responded by making a $50,000 donation to Mercy Corps 78 to aid<br />
in relief efforts. In partnership with Filter Magazine, we also offered our customers<br />
an exclusive compilation CD to benefit relief and recovery efforts in Haiti. The CD,<br />
entitled “Hear to Help,” was sold in all AEO stores across the U.S. and Canada and<br />
on-line at ae.com. 100% of the $10 retail price was donated to Oxfam America 79 .<br />
The effort raised nearly $100,000 to provide water, latrines, plastic sheeting, and<br />
relief materials to Haitians in need after the earthquake.<br />
Haiti & International Medical Corps<br />
When the cholera epidemic hit Haiti in October 2010, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>,<br />
Inc. responded by making a $2,500 donation to International Medical Corps.<br />
International Medical Corps 80 prioritizes health care for vulnerable groups in<br />
Haiti. Their primary health care clinics target the displaced, those under the<br />
highest risk, and those with little or no access to affordable health care. They<br />
have provided more than 160,000 patient consultations through a network of 13<br />
primary health care clinics serving the city of Port-au-Prince as well as rural areas<br />
throughout Haiti.<br />
77 http://www.worldvision.org/<br />
78 http://www.mercycorps.org/<br />
79 http://www.oxfamamerica.org/<br />
80 http://www.internationalmedicalcorps.org/<br />
“Help Haiti Heal” Graphic T-Shirt<br />
To mark the first anniversary of the 2010 earthquake in Haiti, Concern Worldwide<br />
U.S. 81 and <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> partnered to raise funds to rebuild and<br />
support schools in the country. Limited-edition, AE-designed “Help Haiti Heal”<br />
T-shirts were sold in <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> stores throughout the U.S. and<br />
at ae.com. The T-shirts were made in Haiti, by Haitians, to raise awareness about<br />
the continuing need to help Haiti heal. Thanks to the support of a Concern<br />
Worldwide donor, 100% of all sales were donated, raising more than $414,000 for<br />
the continuing Haitian recovery.<br />
Pakistan Flood Relief<br />
In July 2010, monsoon rains led to massive flooding and mudslides that devastated<br />
many regions of Pakistan and affected more than 20 million people. <strong>American</strong><br />
<strong>Eagle</strong> <strong>Outfitters</strong>, Inc. supported flood relief efforts by making a $50,000 donation<br />
to Oxfam America 82 and matched all associate donations to Oxfam. Oxfam helped<br />
provide nearly 1.9 million people with water, sanitation, shelter, and livelihood<br />
support.<br />
Business Council For Peace<br />
The Business Council for Peace 83 , better known as Bpeace, believes the path to<br />
peace is lined with jobs. Put simply: Bpeace believes that more jobs mean less<br />
violence. Bpeace is a non-profit network of business professionals who assist<br />
entrepreneurs in conflict-affected countries to help create significant employment<br />
and expand the economic power of women. The organization’s goal is to create one<br />
million jobs across 1,000 communities. In 2010, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc.<br />
made a $2,500 donation to Bpeace to help launch their program in El Salvador.<br />
81 http://www.concernusa.org/<br />
82 http://www.oxfamamerica.org/<br />
83 http://www.bpeace.org/<br />
56
AE BETTER WORLD COMMUNITY INTERNATIONAL INITIATIVES<br />
International Initiatives (continued)<br />
Vietnam Children’s Fund<br />
In 2007, <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. donated $62,500 to the Vietnam<br />
Children’s Fund 84 to help build a school in the Long An province near Ho Chi<br />
Minh City, Vietnam. The goal of the Fund is to move beyond the past tragedies<br />
of Vietnam’s many wars and look to the future by building schools. In December<br />
2009, one of our senior executives met with local students and teachers in the Long<br />
An province and helped dedicate the new school building.<br />
NEXT Associate Activities<br />
84 http://www.vietnamchildren.org/<br />
57
AE BETTER WORLD COMMUNITY ASSOCIATE ACTIVITIES<br />
Associate Activities Live In These<br />
Our associates love to be part of and give back to their local communities. We host<br />
a variety of activities throughout the year to make it easier for all of us to make a<br />
difference.<br />
<strong>Eagle</strong>s in the Region<br />
Through our <strong>Eagle</strong>s in the Region program, our U.S. and Canadian community<br />
captains help locate local non-profit organizations that support the <strong>American</strong> <strong>Eagle</strong><br />
<strong>Outfitters</strong> Foundation mission of encouraging youth development and conserving<br />
the environment. They also seek out opportunities where associates can come<br />
together to volunteer as a team.<br />
For example, in 2010, several <strong>Eagle</strong>s in the Region advocates combined their<br />
quarterly donations to support Operation Warm 85 . This charity provides winter<br />
coats to children in need in several U.S. markets. Our donation of $9,500 provided<br />
much needed coats to nearly 650 children.<br />
<strong>Eagle</strong>s Team of Ten<br />
Our <strong>Eagle</strong>s Team of Ten program is a global initiative designed to support<br />
our associates’ volunteer efforts by providing a $500 donation to charitable<br />
organizations where at least 10 associates participate together in a community<br />
service or fundraising project. In 2010, our associates took part in 42 Team of Ten<br />
projects throughout the U.S. and Canada, leading to donations of $21,000.<br />
Matching Gifts<br />
We encourage our associates to contribute to their favorite non-profit organizations<br />
and matches donations on a dollar-for-dollar basis to eligible institutions<br />
throughout the United States and Canada. We also host special matching gift<br />
opportunities throughout the year. For example, in August 2010 after the oil spill<br />
in the Gulf of Mexico, we matched donations made to the Student Conservation<br />
Association, which was actively engaged with the U.S. Fish & Wildlife Service and<br />
other local organizations in the rescue of pelicans, sea turtles and other species<br />
that were harmed by the tragedy.<br />
85 http://www.operationwarm.org/<br />
In conjunction with our 2010 Back To School “Live In These” marketing campaign,<br />
we encouraged associates to donate gently used jeans to teens in need in their local<br />
communities. Associates in our stores, distribution centers and corporate offices<br />
took part and donated more than 5,000 pairs to local homeless shelters.<br />
The Mission Continues<br />
In honor of our associates who serve our country, we made a $2,500 donation to<br />
The Mission Continues 86 on Veterans Day 2010. The Mission Continues offers<br />
service fellowships to wounded and disabled veterans and organizes volunteer<br />
projects aimed at engaging veterans, as well as the public, in volunteer service. The<br />
organization’s vision is to build an America where every returning veteran can<br />
serve again as a citizen leader, and where together we honor the fallen by living<br />
their values through service.<br />
Holiday Drive<br />
Every holiday season, we strive to go the extra mile to serve in our local<br />
communities. Some of our associates provide holiday gifts to local foster children,<br />
while others donate to their local food banks or adopt a family to provide gifts. In<br />
2010, our Pittsburgh-based corporate office associates provided holiday gifts for<br />
more than 200 local children and teens in need.<br />
NEXT Community Goals<br />
86 http://www.missioncontinues.org/<br />
58
AE BETTER WORLD COMMUNITY COMMUNITY GOALS<br />
Community Goals<br />
2011-12 Community Goals<br />
• Provide more opportunities for our customers to participate in our community<br />
endeavors and serve in their local communities.<br />
• Develop a strategy for international giving which aligns with our corporate values<br />
and supply chain footprint and improves the quality of life in less developed<br />
regions of the world.<br />
• Establish a philanthropy task force to examine our current national charity<br />
partners and explore opportunities to align further with our company and<br />
associate values and priorities.<br />
59
AE BETTER WORLD FREQUENTLY ASKED QUESTIONS<br />
FAQs<br />
Q: How long have you been committed to Corporate Responsibility?<br />
A: AEO, Inc. has been committed to being a responsible company for years. This<br />
is our first comprehensive report documenting the details of human rights in<br />
our supply chain, sustainability and environmental initiatives, our workplace<br />
culture, and our philanthropic efforts.<br />
Q: I want to work for <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. How do I apply?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. strives to be an employer of choice - a place<br />
where people are excited to come to work because they believe in what<br />
we do, enjoy working with each other, and have fun doing it. Visit www.<br />
liveyourlifeloveyourjob.com to learn more and browse current employment<br />
opportunities.<br />
Q: How can I get involved and help you build a Better World?<br />
A: There are many ways to help build a Better World. Here are a few examples:<br />
• Pay attention to the clothes you buy, including information about the people who<br />
helped make them. If you can’t find information from a company, ask questions.<br />
• Pay attention to the products you use, and how you dispose of them. Reduce, reuse<br />
and recycle whenever possible!<br />
• Mind your energy consumption-car pooling, biking and turning out lights when<br />
not in use are easy ways to start.<br />
• Look for volunteer opportunities in your community and beyond.<br />
• Explore the AE Better World website to learn more about AEO, Inc.’s efforts and<br />
the organizations we participate in and support around the world.<br />
• Follow AEO on Facebook and Twitter!<br />
Q: Do you use sweatshops?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is committed to ensuring that the people who<br />
make our clothes are treated with dignity and respect. For more information<br />
on how we’re working to promote good working conditions in apparel factories<br />
around the world, please click here 87 .<br />
Q: Do you use child labor?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. has a zero tolerance policy when it comes to<br />
child labor and sweatshops. Any factory that is found to be in violation of this<br />
principle must adhere to our strict remediation policy or face termination of our<br />
business relationship. For more details, visit our Code of Ethics 88 and Vendor<br />
Code of Conduct 89 .<br />
Q: What do you do if you find a child working in one of your factories?<br />
A: If a child is found in a factory producing for <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc.,<br />
our first priority is to take action that serves the best interests of that child. We<br />
require that the child be immediately removed from the workplace and that the<br />
supplier pay for the child’s continued schooling, as well as an ongoing salary.<br />
Once the child has reached legal working age, the factory is also required to<br />
provide him or her with employment, if desired. This child labor policy was<br />
informed by “best practice” guidelines outlined by well-regarded civil society<br />
organizations, trade unions, and multi-stakeholder organizations in the apparel<br />
industry. For more information about our efforts to improve factory working<br />
conditions, click here 90 .<br />
87 Page 15<br />
88 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIwODh8Q2hpbGRJRD0tMXxUeXBlPTM=<br />
&t=1<br />
89 http://phx.corporate-ir.net/phoenix.zhtml?c=81256&p=irol-VendorConduct<br />
90 Page 24<br />
60
AE BETTER WORLD FREQUENTLY ASKED QUESTIONS<br />
FAQs (continued)<br />
Q: How many factories does <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. work with and in<br />
what countries around the world, etc.?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. works with approximately 330 factories in more<br />
than 20 countries around the world. We strive to seek out apparel suppliers who<br />
share our commitment to worker safety and well-being and will work to meet or<br />
exceed national and international labor standards.<br />
Q: Why aren’t <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. products made in America?<br />
A: As a global company, we work with manufacturers worldwide, including in<br />
the United States, to make our products. We also partner with a number of<br />
organizations overseas to run our franchise stores. We have stores in Canada,<br />
the Middle East, Hong Kong, China, Russia, and plans to expand to Israel and<br />
Japan, among others.<br />
Q: How do you know the workers in the factories that make your products are<br />
being treated humanely?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. has a Vendor Code of Conduct, which is based<br />
on universally accepted human rights principles and sets forth our expectations<br />
for suppliers, who must agree to comply before we do business with them. The<br />
Code must be posted in every factory that manufactures our clothes in the local<br />
language of the workers.<br />
AEO, Inc. also has a dedicated team of people, and a comprehensive factory<br />
inspection, remediation, and training program focused on improving working<br />
conditions in the global apparel supply chain. To read more about efforts to<br />
improve global factory working conditions, click here 91 .<br />
Q: Does <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. use sandblasting on its jeans?<br />
A: Our AE, Aerie, and 77kids brands are no longer developing new styles with<br />
sandblasting. By Spring 2012, we will no longer have any sandblasted styles on<br />
our store shelves. For more information, please click here 92 .<br />
91 Page 15<br />
92 Page 22<br />
Q: How is <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. trying to reduce its carbon footprint<br />
and support the environment?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. is committed to developing better business<br />
practices to promote a cleaner and healthier planet. Although we are still in the<br />
early stages of implementing our environmental strategy, we are encouraged<br />
by progress from our initial efforts and continue to explore additional<br />
ways to reduce our environmental footprint. For additional details on our<br />
environmental program, click here 93 .<br />
Q: Can the shopping bags in <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. stores be recycled?<br />
A: The vast majority of paper shopping bags used in our <strong>American</strong> <strong>Eagle</strong><br />
<strong>Outfitters</strong>, Aerie and 77kids stores are made from 100% post-consumer recycled<br />
material and are recyclable. In addition, most <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong><br />
and 77kids gift and shoe boxes are made from 100% post consumer recycled<br />
material. Our Aerie gift and shoe boxes currently contain about 30% recycled<br />
content. AEO Outlet stores use plastic shopping bags that contain 60% recycled<br />
material and are also recyclable.<br />
Q: Do you sell fur products? Do you have any policies to prevent cruelty to<br />
animals?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. strictly prohibits the use of real animal fur and<br />
Australian mulesed wool in all of our products. We are also against the use of<br />
animal testing on our products.<br />
Q: Does <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> use organic materials in its products?<br />
A: We took our first step towards introducing environmentally-friendly products<br />
with the launch of an “Eco Shop” in our Holiday 2010 collection. Available<br />
exclusively online, the shop offered men and women’s apparel made from<br />
certified organic and recycled materials. Many styles were made from organic<br />
cotton, which is grown without the use of harmful synthetic pesticides and<br />
results in fewer fossil fuel emissions than conventional cotton. Other styles<br />
93 Page 33<br />
61
AE BETTER WORLD FREQUENTLY ASKED QUESTIONS<br />
FAQs (continued)<br />
were made from recycled content, which gives new life to materials that would<br />
have otherwise ended up in landfills. For more information about our Product<br />
Innovation efforts, click here 94 .<br />
Q: Why doesn’t <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> offer non-treated denim to customers?<br />
A: Denim is a cornerstone of the <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong> brand, and we offer a<br />
wide range of fits and washes to customers. At this point, our customers have<br />
not shown a significant interest in un-treated denim. That said, we are always<br />
evaluating new product ideas and might decide to offer some form of un-treated<br />
denim in the future.<br />
Q: What percentage of your employees are minorities? What programs do you<br />
have in place to ensure diversity?<br />
A: We believe in an inclusive work environment that reflects our core values.<br />
Since 2006, the total percentage of non-Caucasian minorities in our company<br />
increased from 19% to 29%. Women holding Executive roles (Vice President<br />
and above) increased from 25% in 2006 to 37% in 2011. We have a Workplace<br />
Culture Training program that promotes the philosophy of identifying elements<br />
within ourselves and others that make each of us unique. For more information<br />
about diversity at AEO, Inc., please click here 95 .<br />
Q: Are your products safe? Have you ever had any product recalls?<br />
A: AEO, Inc. is strongly committed to the safety and well being of our customers.<br />
We require our products to meet all applicable U.S. state and federal and<br />
Canadian national laws and regulations. To ensure compliance, we maintain an<br />
extensive set of safety testing protocols for our products.<br />
In rare cases where a safety issue has been discovered in a product that has<br />
reached our store shelves, we respond with a comprehensive recall process.<br />
We publicly maintain a list of product recalls conducted in conjunction with<br />
94 Page 39<br />
95 Page 45<br />
the Consumer Product Safety Commission (CPSC) here 96 on our e-commerce<br />
website. For more information on how we work to ensure the safety of our<br />
products, please click here 97 .<br />
Q: How do you decide what music to play in the stores and how loud it should be?<br />
A: Creating a fun and dynamic shopping environment for customers and work<br />
environment for associates is among AEO’s top priorities. The music in our<br />
stores is played at levels fully in compliance with industry standards. We also<br />
have a policy of turning the music down upon customer request.<br />
Q: How do you develop your marketing programs?<br />
A: Marketing programs for each brand are developed by the company’s internal<br />
department, and strive to reflect the unique brand DNA for each concept.<br />
Each aspect of a campaign, from the models to the location to the photography<br />
style is designed to showcase the product, but also to inspire customers and<br />
encourage them to express their own personal style through our brands.<br />
Q: How does <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. decide what non-profit organizations<br />
to support?<br />
A: <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. created its overall giving philosophy based on<br />
input from customers, associates and other stakeholders. Currently, the AEO<br />
Foundation focuses on causes related to youth development and environmental<br />
conservation. Our corporate giving takes many forms, ranging from national<br />
charity partnerships, to customer engagement initiatives, major community<br />
initiatives, international giving and associate activities.<br />
Q: How much money does <strong>American</strong> <strong>Eagle</strong> <strong>Outfitters</strong>, Inc. donate each year?<br />
A: It varies from year to year. However, the company’s total annual contribution<br />
ranges in the hundreds of thousands to millions of dollars in cash and in-kind<br />
support, plus thousands of hours of volunteer time from AEO, Inc. associates<br />
worldwide.<br />
96 http://www.ae.com/web/help/product_recalls.jsp?topic=1<br />
97 Page 11<br />
62
AE BETTER WORLD FREQUENTLY ASKED QUESTIONS<br />
FAQs (continued)<br />
Q: I want to request a gift card or grant from the AEO Foundation. How do I do<br />
this?<br />
A: AEO, Inc. donates a limited number of $25 gift cards to college and high school<br />
sponsored drug-free volunteer events that strive to keep teens and college<br />
students safe.<br />
Each year, the AEO Foundation also allocates a limited number of grants to<br />
non-profit, public charities in Pittsburgh, New York City, Ottawa, Kansas,<br />
and Mississauga, Ontario with tax exempt status under Section 501(c) (3) of<br />
the Internal Revenue Code which fall within the scope of its mission. Before<br />
an organization is considered for a donation, it must fulfill several criteria.<br />
For specific information on requesting gift cards or grants from the AEO<br />
Foundation, please click here 98 .<br />
98 http://www.ae.com/Images/corpResp/images/community/gift_cards_and_financial_grants.pdf<br />
63
AE BETTER WORLD CONTACT US<br />
Contact Us<br />
Like what you see here? Have an idea about how to Live Your Life in a Better<br />
World?<br />
We’d love to hear from you.<br />
Send us a note at: AEBetterWorld@ae.com.<br />
64
AE BETTER WORLD GRI INDEX<br />
GRI Index<br />
Global Reporting Initiative (GRI) Index<br />
This report conforms to the Global Reporting Initiative (GRI) G3.1 guidelines for<br />
Application Level C. The report also includes many indicators from Application<br />
Level B and the industry-specific Apparel and Footwear Sector Supplement.<br />
ABOUT US<br />
About Us 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 3.5, 3.6, 4.8<br />
CEO Letter 1.1<br />
About This Report 3.1, 3.2, 3.3, 3.5, 3.6, 3.7<br />
Our Stakeholders 2.2, 2.5, 3.4, 3.5, 4.12, 4.13, 4.14, 4.15, 4.16<br />
Corporate Governance 2.3, 4.1, 4.2, 4.3, 4.4, 4.9<br />
Guiding Principles 3.5, 4.8, 4.9, AF1<br />
Protect, Respect, Remedy 3.5, 4.12, AF4<br />
Codes & Governance 3.5, 4.8, 4.9, AF1, AF2, AF26, HR6, HR7<br />
Our Products PR1, PR2, PR4, 4.12<br />
Public Policy 4.13, 4.14, S05<br />
SUPPLY CHAIN<br />
Supply Chain AF1, AF2<br />
Our Strategy<br />
Working With Factories 2.5, HR6, HR7, AF2, AF3, AF6, AF8<br />
Our Factory Inspection<br />
Program<br />
Factory Training &<br />
Capacity Building Efforts<br />
How Our Products Are Made<br />
Making Smarter Business<br />
Decisions<br />
AF2, AF3, AF6, AF16<br />
2.5, AF4, AF5, AF6, AF16<br />
AF5, AF6, AF17<br />
Leveraging Collective Efforts 2.5, 4.12, 4.13, 4.14, 4.15, 4.17, HR6, HR7, AF6<br />
Our Performance 2.5, 3.6, 3.9, HR6, HR7, AF6, AF7, AF8, AF9, AF10, AF11,<br />
AF12, AF13, AF14, AF15, AF16, AF25<br />
Supply Chain Security<br />
Supply Chain Goals<br />
ENVIRONMENT<br />
Environment 4.17<br />
Minimizing Waste EN26<br />
Conserving Resources EN5, EN18, EN26<br />
Product Innovation EN26<br />
Environmental Goals<br />
ASSOCIATES<br />
Our Values 4.8<br />
Compensation & Benefits EC3<br />
Communication & Retention 4.14, 4.16<br />
Diversity LA13<br />
Diversity Statistics LA13<br />
Hiring + Training LA11<br />
2010 Business Goals<br />
Associate Goals<br />
COMMUNITY<br />
National Charity Partnerships<br />
Customer Engagement<br />
Major Community Initiatives AF33<br />
International Initiatives AF33<br />
Associate Activities LA13<br />
Community Goals LA11<br />
2010 Business Goals<br />
Associate Goals<br />
65